Advanced Micro Devices (AMD, Financial) has been flying high and hasn’t looked back since its first-quarter earnings release in April 2018. Fueled by a revenue and earnings beat during the first quarter of 2018, launch of 2nd Generation Ryzen Threadripper 32-core processor, demonstration of 7nm GPU and unveiling of 7nm EPYC server processors, the stock is up more than 60% in just over two months. The machine learning and artificial intelligence market potential of the 7nm-based Vega Instinct — AMD’s line of GPUs for high performance computing — is also nudging the stock higher.
With all the success on the Ryzen desktop and EPYC server front, AMD has yet to register growth on the mobile side of things. As the portable PC market is a growth market compared to the desktop market, it's important for AMD to gain market share on this front.
Although the company released Ryzen Mobile — processors for notebooks and portable PCs — last year, team Ryzen has been unable to gain market share on this front. Nonetheless, it’s too early to jump to conclusions as far as portable PC market share of AMD is concerned.
Is an unresponsive portable PC market a problem for AMD?
The portable PC market isn’t a problem but an opportunity for AMD. The lack of market share stems from the fact that only five Ryzen-based laptop models were available for the most part of the second quarter across original equipment manufacturers. Lack of success on the mobile side is due to a limited number of Ryzen Mobile models available, rather than the quality of Ryzen Mobile. Once OEMs warm up to Advanced Micro Devices on the portable PC side, market share will most certainly go up.
As things stand now, AMD seems to be availing itself of the window of opportunity before Intel (INTC, Financial) launches its 10 nm processors in early 2019. According to the recent investor presentation, AMD will be launching around 40 laptop models during the second half of 2018. This will potentially allow AMD to gain serious market share against Intel’s 14nm Coffee Lake processors.
The problem for AMD during the first half of 2018, as mentioned above, was the limited number of models available in the market. Processors are not the only decision point for buyers and, hence, more models will put AMD in a better position against Intel during the second half of 2018.
Moreover, AMD’s mobile processors are at par with Intel’s Coffee Lake – optimized 14nm processor – offerings. AMD’s Ryzen 5 2500U sits decently above some optimized Intel eighth-generations laptops. Cinebench R15, a general purpose CPU benchmark, reveals almost identical scores for Ryzen 5 2500U and Intel’s Core i5-8250U in single and multithreading loads.
To sum up, the lack of market share growth on the mobile front can be attributed to limited number for models, rather than to the lack of quality of Ryzen Mobile processors. As AMD has struck deals with OEMs for releasing more models, the market share position will get better for AMD going forward.
Takeaways
- Although AMD has nothing to show for on the portable PC side yet, market share is set to increase amid a growing number of models being offered during the second half of 2018.
- Investors should hold onto AMD as a share increase in mobile will potentially act as a catalyst during the second half of 2018.
”‹Disclosure: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.
