Analysts are bullish on Advanced Micro Devices, Inc.'s (AMD) ability to steal market share from its chief competitor, Intel Corporation (INTC) , as Intel's sluggish product timeline offers an extended window of opportunity.
This year Intel shares are falling about 3.5%, and down about 1.2% today alone, while AMD has made a remarkable run from under $11 a share in January to almost $30 this morning, despite a slight slide at midday to $29.80.
In the past several months, AMD has been methodically catching up with Intel in terms of CPU market share.
"The manufacturing problems at Intel are spilling into AMD's share gains," Kevin Rottinghaus, president and lead technology analyst at Edgewater Research Co. LLC told Real Money in an interview. "Their next product release isn't until the fourth quarter of 2019, so that's over a year until anything material."
He explained that the spate of releases ahead for AMD make this an ideal situation for the company while their competitors are moving slowly.
"They're in a good product cycle and they're competitor [Intel] is not," he said. "We're expecting [AMD] to continue to gain in data centers in relation to Intel."
He added that problems with regards to chip flaws reported by Intel in August contrasted with the margin increases expected for AMD should amplify AMD's efforts to eat into Intel's market share lead.
Despite his outlook, Rottinghaus explained that his firm is remaining neutral on AMD.
Rottinghaus' analysis was built upon by Cowen & Co. senior research analyst Matthew Ramsay, who was not so cautious as he issued a $30 price target and an outperform rating for the stock.
"Intel's delayed 10nm roadmap - originally targeted for 2016 launch in client and now pushed to the second half of 2019 - opens opportunities for AMD across the business," he wrote in a note on September 3.
Ramsay added that Intel CEO Brian Krzanich's openness on the probability of AMD stealing market share amid its manufacturing delays adds to the bull case for AMD.
A Wells Fargo note from September 9 added to that, helping quantify the opportunity in Intel's own words.
"Intel has publicly admitted that AMD will take at least some market share from the company with management stating that its goal was to defend its position and not let AMD capture 15-20% market share," the note explains.
As the manufacturing slowdown has already pushed back the release of the 10nm chips two years, any additional slowdown at Intel would open up the growth opportunity for AMD further.
To be sure, there remain macro factors that impact AMD outside of its battle with Intel.
These pressures are headlined by tariffs and a trade war between the US and China, as the company sources material from China and has made significant strides with major Chinese partners like Baidu and Tencent.
Any pressure on these partners would of course reverberate through to AMD.
"We think the semiconductor index overall is being held down by worry over the risks associated with the tariffs," Rottinghaus explained. "But we think that [AMD]'s story in terms of their margins and product cycle is more compelling [than risks from tariffs]."