Advanced Micro Devices will gain even more market share if the company maintains its current pricing strategy for its latest lineup of processors. AMD’s aggressive chip pricing might help it win market war against its fierce competitor, Intel. AMD (ticker: AMD) is making its new Ryzen 7000 series chips available at retailer outlets on Sept 27. The company announced that the chips that have been upgraded with a new architecture called “Zen 4” will offer a double-digit percent increase of roughly up to 45% in performance on the application versus what it now offers.
The company is also introducing a motherboard platform called AM5 for the Ryzen 7000 processors. AM5 will support various new features, including DDR5 and PCI Express 5.0. These technologies enable faster memory and storage performance, respectively.
According to Wedbush’s Matt Bryson, the company’s pricing for its Ryzen 7000 models, which were generally in line with prior generation and included a $100 price cut for the high-end 7950X chip, was very attractive. He stuck to his Outperform rating on the stock and $125 price target for the chip maker.
“Steady to lower MSRP vs. the 5000 series launch suggests AMD is not lifting pricing to offset an inflationary environment,” he wrote. AMD is “rather looking to drive market share gains.”
Bryson also took note of AMD’s chief rival- Intel- plans to raise its prices later this year because of inflationary pressure. Both AMD and Intel use the x86 chip architecture in making the processors that act as the key computing brains for PCs and servers.
Earlier in the month, AMD reported better-than-expected earnings; however, its forecast was slightly less than the expectation for the September quarter due to weaker PC demand.
Byron expects AMD to overcome the challenging industry environment with its strong competitive position in the enterprise market.
“We certainly see the larger opportunity as being in the server space, where we believe AMD’s Genoa will continue to enjoy substantial performance advantage over Intel,” he said.
AMD stock declined 39% this year, compared to a 30% drop for the iShares Semiconductor ETF (ticker: SOXX), which tracks the performance of the ICE Semiconductor Index.
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