New FirePro GPUs Do Little To Lift AMD’s Stock Price

by Trefis Team
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Introducing the new FirePro S9000 and S7000 graphic cards last week, AMD (NYSE:AMD) looks to be speeding up the delivery of virtual desktops through servers. The graphic cards are used for virtual desktop infrastructure and workstation graphics deployment in data centers. They provide flexibility to set up multiple virtual desktops and enable users to run common office applications on client devices through the virtual desktops, delivered via the FirePro GPU’s.

AMD claims that its new FirePro graphic processors reduces power by up to 95% when idle, significantly cutting operating costs in data centers. Additionally, the GPUs are equipped with 6GB GDDR5 frame buffer which help deliver more memory bandwidth than the competing products. By providing significantly higher compute performance, AMD claims that the new FirePro cards are the most powerful server graphic processors in the industry. [1]

The graphic processor market is primarily dominated by two players – Nvidia (NASDAQ:NVDA) and AMD. While in the discrete desktop and notebook GPU markets both the company’s give close competition to each other, when it comes to professional GPUs Nvidia is the clear winner.

We estimate AMD to currently account for 16% of the professional GPU market. The company clearly lags behind Nvidia in the server graphic market, as the latter’s Tesla graphic processors are present in some of the fastest supercomputers for complex math and scientific calculations. [2]

However, AMD has been increasingly focused on increasing its share in the graphics processor market. Last month, it hired an ex-Intel executive as the chief graphics product architect to further expand its graphic technology road-map. Recently, AMD also introduced the FirePro W9000 GPU, which it claims to be the world’s most powerful workstation graphics. (Read: AMD’s Powerful Workstation Graphics Line Takes Aim At Nvidia)

As the company continues to add new products to its portfolio that promise to offer improved performance, new features, additional software support and lower power consumption, we believe that AMD might succeed in marginally increasing its market share by the end of our forecast period. However, as we estimate the professional graphics division to contribute a mere 4.3% to our price estimate of $5.71 for AMD, we do not believe that the same will have a significant impact on its stock price.

In case you disagree with our forecasts, you can adjust the same using the graph above to study the resultant impact on AMD’s stock price.

Our price estimate of $5.71 for AMD is at a premium of above 40% to the current market price.

See our complete analysis for AMD

Understand How a Company’s Products Impact its Stock Price at Trefis
  1. AMD Introduces Industry’s Most Powerful Server Graphics Processor, AMD Press Release, August 27, 2012 []
  2. AMD Speeds up Virtual Desktop Delivery Through New Graphics Cards, PC World, August 28, 2012 []
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