AMD Receives Price Boost Due To Potential Gaming, Data Center Upsides

Semiconductor designer Advanced Micro Devices, Inc (NASDAQ:AMD) has received a price target upgrade.by investment banking company and research business firm RBC capital letter today. The upgrade comes as the chipmaker readies itself to announce earnings results for the tertiary quarter of 2020 at the terminate of this calendar month. It is based on RBC's aqueduct checks for AMD's Gaming and Data Centre concern and follows AMD's launch of its Zen 3-based Ryzen 5000 desktop processors last week.

AMD'south New Cost Target By RBC Capital Sits At $92/Share Every bit Firm Expects Company To Beat Gaming and Data Center Analyst Consensus

RBC annotator Mitch Steeves focuses his annotator notation on AMD'due south anticipated strong performance in the Gaming and Information Center business to counter opinions nearly the company losing steam in 2020'south penultimate quarter. According to him, AMD should finish up beating annotator consensus for its Gaming and Data Center acquirement 3Q 2020. AMD segregates its revenues into two segments, and Gaming and Data Centre form crucial components of both.

Steeves' report comes as the company's GPU rival NVIDIA Corporation wraps up its launch of new products and struggles with managing massive early-phase need for the products. His note also comments on AMD'southward rumored acquisition of Californian flexible computing products manufacturer Xilinx, Inc.

Purported news of AMD's interest in the company was cleaved by the Wall Street Journal before this calendar month, and equally opposed to investor reaction towards early rumors of NVIDIA's Arm acquisition, AMD'south share cost did non exhibit any upward move in response to the report. In fact, the Journal'south written report was met with skepticism by Wall Street and other analysts, who struggled to see operating synergies between AMD and Xilinx.

AMD primary Dr. Lisa Su showcasing a notebook powered by the visitor's Ryzen 4000 fries at the CES 2020. (Epitome: AMD)

Steeves uses AMD's expected upside in Gaming and Information Center to quell some concerns that rose surrounding the visitor'due south alleged interest in Xilinx. He believes that the upside is sufficient to put to residual beliefs that AMD's organic growth - referring to the company's revenues from its core processing and graphics products - is slowing downward and that the visitor is interested in acquiring Xilinx to negate some of the effects of this slowdown.

As opposed to NVIDIA'due south decision to acquire Arm, a company that now has a footprint in artificial intelligence, supercomputing and data eye applications, AMD'due south rumored involvement in Xilinx carries with it fewer synergies. While with the Arm deal NVIDIA has the potential to take a cutting of the data center and supercomputing pie, among other applications and push more NVIDIA GPUs into enterprise hands, AMD should benefit only from Xilinx'south latest products.

Xilinx holds a commanding position in the market for customizable chips known as Field Programmable Gate Arrays (FPGAs) which allow their users to change the chip's use-case on a per-need basis. It commands more share than Santa Clara chip giant Intel Corporation in the FPGA market, and through the acquisition, AMD should gain access to an important market place over another traditional rival.

However, Xilinx has too developed its Adaptive Compute Acceleration Platform (ACAP) dubbed Versal. This is expected to evangelize significant improvements in compute density and bandwidth over the company's current FPGA products and come in an era where artificial intelligence, data middle, fifth-generation (5G) cellular networks and automotive systems are expected to increase in importance.

Naturally, if AMD ends upward spending the rumored $30 billion for Xilinx, it has the potential to competitively place itself in a marketplace that will just abound as fourth dimension passes. Demand for data heart products grew during the ongoing pandemic and the Xilinx bargain could end up providing AMD with a prissy alternative to the advantages that NVIDIA hopes to proceeds once (or if) its Arm acquisition clears regulatory hurdles.