AMD Stock: Can the PC Refresh Cycle Spark a Rally?
Investors in Advanced Micro Devices (NASDAQ: AMD) have faced a year full of letdowns. As of the Mar. 12 close, shares are down 49% over the past 52 weeks. The semiconductor stock has experienced periods of significant gains, only to retreat further over a longer period of time. When markets constantly compare the stock to one of the most successful firms in the world, NVIDIA (NASDAQ: NVDA), AMD finds it hard to get a gasp of air.
AMD has several parts of its business. The most important is its data center segment, which is its largest and fastest-growing segment. When compared to NVIDIA, the data center business is often the focus, so the success of its other segments often feels ignored. AMD’s client segment is its second-largest and second-fastest-growing segment.
Many expect a significant event in 2025 that could be a boon to this part of the business: a PC-refresh cycle. If this comes to fruition, AMD has a strong chance to take substantial market share from its other rival, Intel (NASDAQ: INTC). Below is a breakdown of this part of the business and the potential it has to influence the stock.
AMD’s Client Segment: Product Trends Compare Favorably to Intel
AMD’s client segment primarily focuses on its Central Processing Units (CPUs) for desktops and laptop computers. This segment does not include the firm’s dedicated graphics processing units (GPUs) for these customer groups. Intel dominates the market for both desktop and laptop CPUs, holding over 70% market share. However, AMD has been gaining ground, according to Mercury Research. In 2024, AMD increased its market share in desktop CPUs by over 7% to 27%. In laptops, its market share grew by over 3% to nearly 24%.
Seeing what tech experts think about AMD and Intel’s latest products can help assess whether AMD can continue taking market share. Generally speaking, most tech experts say AMD’s latest processors beat Intel’s. They also cost about the same. Additionally, AMD’s products are improving more than Intel’s. In engineering applications tested by Develop3D, AMD’s new CPUs saw performance gains of 7% to 22%. However, Intel’s new CPUs saw gains max out at 9%. Tom’s Hardware and Develop3D say Intel’s new processors sometimes perform worse than their last generation in certain use cases.
PC Refresh Cycle: An Opportunity for AMD to Grow Market Share
Many analysts expect a PC refresh cycle to occur in 2025. This is a period when a large number of users upgrade their devices. Microsoft’s (NASDAQ: MSFT) decision to end support for its Windows 10 operating system in October drives much of this. This means that the company won’t offer updates and security fixes to devices with these older operating systems.
Additionally, different software applications will lose compatibility over time. Forecasters at IDC currently see total PC shipments growing by 3.7% in 2025. This would mark a significant increase from just 1% growth in 2024. IDC expects commercial purchasers to contribute most of this growth. Luckily, AMD has been improving its position in that market. Dell Technologies (NYSE: DELL), one of the leaders in the space, will, for the first time, sell commercial PCs with AMD CPUs.
Overall, AMD has a strong chance to keep gaining client CPU market share from Intel. This is due to improved performance in its products versus Intel, an upcoming refresh cycle, and more commercial PC partners.
AMD: Client Segment Can Be a Big Contributor, But Data Center Holds the Keys
To understand how the client segment affects AMD’s stock, knowing its size in proportion to the overall business is essential. Client revenue of $2.3 billion last quarter accounted for approximately 30% of the company’s total revenue. For the entire 2024 year, the figure was 27%. This shows that this is an important part of AMD's business but not its main driving factor. Given industry trends and AMD's strong position, there is a significant opportunity for its client segment to aid its share price.
Ultimately, the market's focus is likely to remain on the company’s data center segment. AMD might only see its share price reflect a stronger position in its client segment when optimism about its data center segment grows. NVIDIA's presence continues to make achieving this infinitely easier said than done.
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