Shares of Advanced Micro Devices rose Tuesday as analysts upgraded AMD’s shares on news that Dell will switch its loyalty away from pricier Intel processors to the tune of several million units.
AMD was trading heavily Tuesday, with share prices up about 4.25 percent by midday, at $25.71 per share, or $1.05 higher than Friday’s close of $24.66.
Thomas Weisel Partners upgraded its estimates for the company from “peer perform” to “outperform.” Caris & Company upgraded its rating from “below average” to “average.”
In its report, Thomas Weisel cited shipments of 12 million to 15 million processors to Dell in the coming year, a level of penetration that offers the Sunnyvale, California chipmaker new opportunities for growth.
This represents sales of at least $840 million, compared with $150 million in 2006, according to the report.
“While we acknowledge the technical superiority of Intel’s Core Microarchitecture … we believe that AMD offers a compelling mainstream solution and an excellent price/performance proposition,” wrote analyst Eric Gomberg of Thomas Weisel in a research note.
Dell Loads up on AMD
Separately, DigiTimes reported Tuesday that Dell may use as many as 20 million AMD chips in its notebook, desktop, and server product lines between the fourth quarter of 2006 and fourth quarter 2007. This estimate was based on sources in the Taiwanese notebook industry.
Such sizeable orders are an indication that Intel may have to struggle to hold onto its market share leadership in the microprocessor space. It’s also a test as to how much embattled computer maker Dell will be able to make a comeback in light of its disappointing earnings last quarter.
Cost cutting on the chip side may or may not be the answer, according to analysts’ earlier reports.
Last month, Dell announced that it will be lowering prices to consumers. Shares of Dell rose $0.18 to $22.73 in midday Tuesday trading, from $22.55 at Friday’s close.
AMD has been making aggressive moves on the server processor side. The company predicted last month it would more than double its share of the server market in three years to 40 percent.
