Please ensure Javascript is enabled for purposes of website accessibility

AMD's Notebook Market Share Gains Accelerate

By Timothy Green – Aug 6, 2020 at 8:51AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company is making significant gains, particularly in notebooks.

In every market where Advanced Micro Devices (AMD -1.65%) competes with chip giant Intel (INTC -1.11%), the company is stealing share from its larger rival. What's more, the pace at which AMD is winning share in the notebook chip market is quickening, a testament to the quality of products the company is now churning out.

Data from Mercury Research for the second quarter shows the tide continuing to turn in the x86 processor market. While AMD's market share gains in the desktop PC and server chip markets were similar to recent quarters, the company is making substantial progress in the notebook chip market.

The AMD logo on a chip.

Image source: AMD.

Steady gains for desktops and servers

AMD's unit share of the desktop PC processor market was 19.2% in the second quarter. That's up 0.6 percentage points from the first quarter, and up 2.1 percentage points from the same period last year. In recent quarters, sequential market share gains ranged from 0 to 0.9 percentage points.

AMD's last significant desktop chip launch was the Ryzen 3000 series in July of 2019. The company rolled out some refreshed chips in June of this year, but they're built on the same architecture and manufacturing process as the original 3000 series chips, offering only minor performance improvements. The company also recently launched a line of OEM-only desktop chips with integrated graphics, but they too use the same technology as the 3000 series chips. AMD is expected to launch new 4000 series desktop chips, based on the new Zen 3 architecture, by the end of the year.

In the server chip market, AMD started from close to zero a few years ago. The company claimed a 5.8% unit market share in the second quarter, up 0.7 percentage points from the first quarter, and up 2.4 percentage points year over year. Mercury Research's data counts all server class processors; AMD's market share would be higher if only chips going into traditional servers were included.

Breaking out in notebooks

While a portion of desktop chips go to those building their own PCs, that's not the case in the notebook market. To win notebook market share, AMD must convince OEMs to build systems around its chips.

Until the second quarter, AMD's desktop market share was higher than its notebook market share. The situation has now flipped: AMD claimed a 19.9% unit share of the notebook chip market in the second quarter, up a whopping 2.9 percentage points from the first quarter, and up 5.8 percentage points year over year.

The launch of AMD's Ryzen 4000 Mobile chips earlier this year is likely the main driver of this acceleration in market share gains. The company said during its second-quarter earnings call that there were 54 Ryzen 4000 notebooks currently on the market, with more on the way in the second half of the year.

The biggest challenge AMD may face in the notebook market is brand perception. After many years of AMD-powered laptops being rightfully viewed as inferior to Intel-powered laptops, it may take a while for the typical notebook buyer to stop favoring Intel.

More market share gains ahead, but investors beware

Given the quality of AMD's recent products, more market share gains for the company are likely. However, the market is already pricing in some staggering growth. AMD is valued at about $100 billion, roughly 11 times the average analyst estimate for 2020 sales and 80 times the estimate for earnings.

AMD may be able to deliver enough growth in the coming years to justify today's valuation, but any stumble could send the stock plunging. The story behind AMD is compelling, but it's a risky stock, nonetheless.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intel Stock Quote
Intel
INTC
$29.34 (-1.11%) $0.33
Advanced Micro Devices Stock Quote
Advanced Micro Devices
AMD
$75.14 (-1.65%) $-1.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.