In its recent quarterly earnings, AMD (NYSE:AMD) announced that its latest Opteron 6000 series server processors are quickly gaining traction among server manufacturers such as Dell (NASDAQ:DELL), HP (NYSE:HPQ), Acer, Cray and SGI who have planned to come up with more than 25 different Opteron 6000 based platforms.
AMD’s competitor Intel (NASDAQ:INTC) dominates the server processor market with approximately 70% share and we estimate the server processor business constitutes 23% of Intel’s stock price. In comparison, 43% of AMD’s stock depends on its server processor business.
Intel Launches New Server Processors First
Intel recently took the lead in server processor development by launching its 32nm, six-core, Xeon processor which outperformed rival server processors in terms of processing power and efficiency. We have written in the past about how the popularity of this processor can lead to market share gains for Intel and a potential upside for its stock.
We believe that AMD’s new Opteron 6000 series, consisting of the world’s first 8 and 12-core processors, will make it harder for Intel to gain server processor share and will help AMD avoid major market share loss to Intel.
Opteron 6000 Helps AMD’s Server Processor Market Share
AMD’s claims that its 8 and 12-core processors not only outshine competing processors in terms of performance per watt, but also on a performance per dollar basis. The initial feedback from enterprises and server manufacturers for these processors has been very encouraging.
We believe AMD’s Opteron 6000 will help AMD counter the growing threat from Intel’s next generation Xeon processors. We expect AMD to maintain its 2009 server processor market share of 32% in 2010 and grow slightly over our forecast period.
You can modify the Trefis forecast above to see how AMD’s stock price is impacted by its server processor market share.
For additional analysis and forecasts, here is our complete model for AMD’s stock.
