AMD makes money by selling desktop, notebook, and server processors to PC makers like Dell, HP and Toshiba. We estimate that AMD’s server processor business constitutes 60% of the $3.23 per share Trefis price estimate for AMD. Since the company is heavily in debt ($4.52 of debt, per share), the performance of its most valuable business, server processors, is extremely important.
We estimate that AMD’s server processor market share increased from 5.9% in 2004 to 31% today due primarily to the failure of Intel’s high-end Itanium processor in gaining widespread customer adoption. Before the introduction of Itanium, Intel had 94% market share within the server processor market.
Although we believe AMD will be able grow its server processor share due to the advantages of its current line of Opteron processors, Intel’s history highlights the uncertainty of success for future processors. Within AMD‘s content on our platform, you can see how important AMD’s Server Processor Market Share is to the company’s stock price.
