How Big Can AMD’s Server Business Become In The Next 6-7 Years?

While AMD‘s (NYSE:AMD) recent strong performance has been driven, in large part, by the success of its Ryzen line of CPUs and more competitive Radeon GPUs, the company is also looking to make inroads in the server processor market. AMD barely managed to take 1% market share last year, but we expect that to change meaningfully going forward. Take a look at our interactive breakdown of AMD’s server business forecast for more details. Our price estimate for AMD stands at $10, which is slightly below the current market price.

AMD’s server business could grow nearly five-fold in the next 6-7 years

We expect AMD’s server revenue to jump from $113 million in 2016 to nearly $870 million in 2024, implying almost a 7x increase. As a percentage of total revenue, the figure will increase from 2.6%  to 10.5%. AMD is starting to see some revival in the server CPU market, which is largely dominated by Intel. Server processors are relatively high-priced and are more profitable. Therefore, growth in this segment bodes well for AMD’s thin margins.

Contribution of server business to AMD’s overall business will jump significantly

Growth Driver: EPYC product refresh leading to 5% market share gain

AMD’s server market share stood at a paltry 1% in 2016, and AMD has struggled somewhat since Intel introduced Bay Trail-M and Bay Trail-D processors at competitive prices in 2014. However, the new EPYC line of server processors is seeing strong adoption, and we expect AMD’s server market share to bounce back to 5% moving forward, a figure it last saw in 2013. In addition, AMD’s expertise in GPU technology should allow it to tap into the AI and machine learning market, similar to what Nvidia has been doing lately.

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