An interesting note from Advanced Micro Devices’ (NYSE:AMD) first quarter earnings release was the success of the company’s Brazos platform. Management noted that its Brazos processors are seeing very encouraging customer adoption. AMD competes with Intel (NASDAQ:INTC) and Nvidia (NASDAQ:NVDA) in microprocessor and graphics business.

Our price estimate for AMD, at $9.63, is about 5-10% above market price.

Brazos Adoption

AMD management discussed recent results for its Brazos processors during the company’s recent earnings release.

We launched the first of our revolutionary AMD Fusion APU platforms based on our low-power Brazos processors, and we’re pleased to report excellent OEM adoption and sell through to end users. In the first full quarter of availability, roughly half of our notebook shipments were based on Brazos, a product rapidly gaining credit for redefining the user experience in both the Netbook and Thin & Light notebook segment.^[1]

What this means is that AMD may now have a chance to improve its position in the notebook market, where it has recorded much lower market share than observed in the desktop segment. Compared to about 28% marked share in desktops, AMD had just 13.6% market share in notebook market in 2010. Brazos has low-power processor, so with the launch of Llano, AMD will be looking to better its position in the heavier performance notebook segment as well. AMD has already begun shipping its Llano processors. Overall, we anticipate to see an uptick in AMD’s market share.

Value of Notebooks to AMD

Including our expectations for market share gains, we estimate that notebooks processors constitutes about 32% of AMD’s stock value. This is greater than the contribution from desktops, due to higher expected notebook shipment growth. If the recent success of Brazos continues in the light notebook segment, and AMD also does well in heavier notebooks, there could be notable upside to our AMD stock price estimate. If AMD can lift its market share in notebooks to 20% by the end of our forecast period, for example, there could be 13% upside to our $9.63 price estimate.

*While netbooks aren’t yet explicitly broken out in our model, we plan to provide this layer of clarity in a future update.

See our complete analysis for AMD stock here

Notes: