Advanced Micro Devices (NYSE:AMD) is set to launch its Llano APU to compete with Intel’s (NASDAQ:INTC) Sandy Bridge. Here we take a look at how these two processors stack up against each other. AMD also competes with Nvidia (NASDAQ:NVDA) in the PC microprocessor and graphics businesses.
Our price estimate for AMD stands at $8.85, which is roughly in line with market price.
- Factors Behind Our Revised Price Estimate For AMD
- AMD Turns Profitable In Q2’16: Expected Growth In All Businesses To Help Deliver Non-GAAP Profitability In 2H’16
- AMD’s Q2’16 Earnings Preview: Strong Semi-Custom & GPU Demand To Fuel Growth
- Why Brexit Will Not Have A Significant Impact On The Semiconductor Industry
- What Caused The Sudden Surge In AMD’s Stock Price? Why We Believe The Market May Have Over-Reacted
- AMD’s Q1’16 Earnings Review: Increasing Computing & Graphics Share & Semi-Custom Sales To Drive Growth
We estimate that about 61% of AMD’s value comes from notebook and desktop processors. Given that Llano is going to cater to this segment, it is worthwhile looking at the factors that could contribute to its success.
AMD’s Llano Performs Better with Video-Intensive Processing
The image below, from a video posted by AMD on YouTube, presents a brief comparison of AMD’s Llano vs Intel’s Sandy Bridge. 
The comparison indicates that AMD’s Llano maintains lower power consumption and performs better when there is multi-tasking involved with heavy video or graphic processing. However, PCWorld offers a different take:
“If a buyer needs to run programs that stress CPUs they may prefer laptops with Sandy Bridge, which has a CPU core that is faster and more advanced than the CPU in AMD’s Llano, which is based on an architecture that is six to seven years old.” 
Looks like it will come down to what consumers prefer for everyday use. While AMD is betting on more usage of video and graphics, Intel still thinks that going with a more powerful CPU and putting relatively less emphasis on graphics is the way to go.
We should note that several programs written to operate on OS like Windows are written for multi-core CPUs. However, AMD is providing tools for programmers in order to encourage them to develop applications that take advantage of graphics processors. 
If AMD Bounces back in the Notebook Market, There Could be Significant Upside
AMD has suffered a significant market share decline in notebook processors since hitting a peak in 2007, and holds a much lower share in this segment compared to desktops. While desktop sales aren’t showing much growth, notebook sales should increase despite the threat from tablets.
Can the launch of Llano APU help AMD bounce back in the notebook segment? Time will tell, but if AMD can recover towards it’s historical notebook CPU market share peak in the next 2-3 years, there could be more than 10% upside to our $8.85 price estimate for AMD stock.
You can test this scenario, and others, by dragging the trend line in the interactive chart above.
- AMD Fusion APU Llano in a Multi-Tasking Technology Demonstration, Youtube, Feb 28 2011 [↩]
- AMD’s Llano Could Heat up Chip War With Intel, PCWorld, Mar 18 2011 [↩] [↩]