Goldman Sachs, citing problems with Intel’s 10 nm manufacturing process delivery – which was supposed to be available in the market for years now – has reduced the blue giant’s stock rating. Previously at a “neutral” stance – already downgraded in the face of Intel’s manufacturing woes – the stock is now at a “Sell” level. Even though Intel is still outperforming the S&P 500’s 6.7 percent return with their (current) 8.6 percent this year through Thursday, the outlook isn’t good for the company.

“We see Intel’s struggles with 10 nm process technology having ramifications in terms of its competitive position – across a broad set of products. While the 10nm push is well-publicized at this point, we believe Intel’s manufacturing issues could potentially be deeper-rooted than what most think and could have a sustained impact on market share and/or spending levels as Intel competes with a growing/stronger TSMC eco-system.”

Goldman Sachs Analyst Toshiya Hari

As to AMD, Goldman Sachs has a much more positive outlook, moving the company’s shares from the “sell” rating it was in to a “neutral” stance. Citing belief in increased server and consumer market penetration with AMD’s products in the next two years: AMD’s server chip market share will rise to 5.1 percent in 2019 and increase to 9.4 percent in 2020 from an estimated 2.2 percent this year.

“We find it increasingly harder to argue our prior bear thesis – even following the recent stock price move – given Intel’s struggles with 10nm process technology. The delay in Intel’s new products will allow AMD to gain share in not only client (i.e. desktop PC, notebook PC) CPUs, but also in the lucrative server CPU market.”

Goldman Sachs Analyst Toshiya Hari

AMD’s stock was – and likely still is – terribly undervalued for the company’s IP and expertise – the underdog terminology has served to put the company’s outlook in a much more negative view than it needed to be – this still is the only second company that’s capable of designing x86 chips, and let’s not forget how it’s been delivering on that front in no shy means in the last two years. Owing to that same undervaluation, though, AMD’s stock has risen 85.8 percent this year through Thursday versus the S&P 500’s 6.7 percent return. The chip stock’s performance ranks as the second-best return in the S&P 500 this year.


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