The work from home economy has already boosted several companies in the virtual space which should lead to higher data center demand. While Advanced Micro Devices (AMD) has held up well in the downturn, investors have probably missed the boost in demand the company could see from the data center segment. My investment thesis continues to see the stock as a very compelling buy anywhere below $50.
Image Source: AMD website
Stay At Home Economy
Several companies have already indicated strong demand for services that workers and consumers can utilize from home. Zoom Video Communications (ZM) and Teladoc Health (TDOC) are seeing surging demand as workers complete meetings online and patients talk to doctors virtually. Even Best Buy (BBY) confirmed demand for electronics has exceeded forecasts while data center customer Twitter (TWTR) has seen a surge in engagement.
The end result is more demand for networking and data center equipment. Samsung recently confirmed a boost in data center demand despite the global economic slowdown. The semiconductor giant expects to see strong demand in the space.
Intel (INTC) remains the dominant player in the data center space, but the company is expected to quickly cede market share to AMD in the server segment space this year. SemiAccurate has the chip giant cancelling a server platform that places Intel even further behind AMD.
A lot of the benefits from increased data center demand should accrue to AMD. Intel predicted decent server demand in the 1H of the year, but the chip company forecast dire numbers in the 2H.
Date center revenues were predicted to grow 25% in Q1 with sales only up high single digits for the year. In the 2H’20, AMD is not only going to take server market share from Intel, but also the company could actually take sales from Intel.
All of the data points lineup for AMD taking tons of market share over the next few years with major boosts from the work from home economy. Via the Financial Analyst Day…