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The analyst is calling for Q1 sales of $5.5 billion with a Q2 guide of $6.4 billion, fueled by the integration of Xilinx (NASDAQ:XLNX). Arya also expects AMD to reiterate 31% YoY organic growth with total sales of $25 billion (up 50%+ YoY) including Xilinx which is above the $24bn current consensus.
“While AMD also faces a ~3% (or $800mn) topline headwind/9c (or 2%) EPS headwind on PC softness, we think it could be offset by stronger laptop pricing (enterprise mix-shift), game console channel rebuild, server strength, and Xilinx upside (pricing, Altera share gains) driving total to unchanged $25bn in sales/>$4 in EPS. Note, bulk of PC downside is in low-end Chromebooks where AMD did not participate, nor was it exposed to Apple’s (NASDAQ:AAPL) internal silicon switch,” Arya said in a client note.
The analyst is especially positive on valuation, which now trades at 21x PE “well below our 30%+ CY21-24 pf-EPS growth-rate.”
On the other hand, Arya is bearish on Intel (NASDAQ:INTC) on rising competitive, strategic, and financial headwinds. The analyst is calling for EPS of $0.81 on sales of $18.1 billion which compares to a consensus of $0.80 on revenue of $18.3 billion.
Moreover, the analyst sees a risk of a guidance miss – $18 billion vs $18.5 billion consensus and CY22 sales of $74 billion to $76 billion, lower than the consensus of $75.4 billion.
“We see modest 2-3% impact to CY22 on PC headwinds and believe this sort of “benign” INTC report would be positive for semis, especially AMD. Conversely, a >$3bn cut to CY22 sales (barring share shifts) could be perceived as bigger negative for semis/semicaps given INTC’s broad incumbency,” Arya added.
By Senad Karaahmetovic
