By Sam Boughedda
BofA analysts said Thursday that the firm prefers Buy-rated Advanced Micro Devices, Inc. (NASDAQ:AMD) over Underperform-rated Intel (NASDAQ:INTC).
Ahead of first quarter earnings releases, the analysts told investors in a note that the firm has tweaked down CY23 INTC sales/pf-EPS estimates by -6%/-38% on continued near-term PC inventory and sluggish data center demand headwinds.
Meanwhile, BofA keeps AMD estimates steady, noting that they are already below consensus on similar near-term concerns, although "with positive offsets from a stronger/ accretive shift to embedded (Xilinx) demand in industrial/auto markets."
"While higher China spending and Windows 11 refresh should somewhat help demand recover in CY24/25, we highlight elevated inventory for longer impacts INTC disproportionately (vs. AMD, who outsources manufacturing)," they wrote.
"On the data center side, we continue to anticipate a broad-based 2H recovery but note INTC Q1/Q2 remain at risk on networking inventory builds (per LITE, MU, MRVL)," the analysts added. "In contrast, AMD remains exposed mainly to cloud vendors who should see CY23 spending increase by +5% YoY as they expand investments amid the rising AI tide."
"While some point to INTC stock's recent outperformance as a proof point of its AI portfolio potential, we note INTC remains a share donor to AMD in server CPUs at least until 2025 when 'Intel 3' Granite Rapids ramps in volume."