Citigroup: PC shipments rebound in August, maintains "buy" rating on AMD (AMD.US)

Intellidsec learned that Citigroup maintains its Buy rating on AMD (AMD.US) due to a 15% month-on-month increase in notebook shipments in August. Citigroup also noted that AMD is gaining more share in the field as its AI chips are cheaper than Nvidia's (NVDA.US) competitors.

However, the 15% month-on-month growth more reflected the weak demand in July than a substantial improvement in the market. Carrie Liu, a City analyst, predicted a 4% month-on-month growth in notebook demand in the third quarter of 2024, lower than the 5% average. Citigroup forecasted 256 million units of personal computer shipments in 2024, up 1% year-on-year, consistent with the pre-pandemic level.

Christopher Danely, an analyst at Citigroup, said in a report: "We believe the recovery of personal computers seems weaker than expected after our dialogue with Intel (INTC.US), Dell (DELL.US) and Western Digital (WDC.US) last week. We believe the replenishment of personal computers has ended, and there may be a mild headwind in the short term." Citigroup also maintained its "Neutral" rating on Intel, whose personal computer and server businesses account for about 80% of its revenue.

However, AMD is trying to grab a larger share in the server chip market currently dominated by Nvidia. Nvidia's chips are highly valued by cloud computing companies, but the high cost has prompted multiple suppliers to use AMD's chips to enhance their data centers.

For example, according to a report by The Information on Wednesday, a senior executive at Oracle (ORCL.US) said that some of the company's cloud customers are using AMD's chips for inference in artificial intelligence. On Monday, the CEO of Amazon's cloud business unit AWS said that the company's cloud services not only provide customers with AMD chips but also provide them with Intel, Nvidia, and AWS chips.

Although AMD's chips are not as powerful as Nvidia's, they are more affordable. However, they still have a long way to go to catch up with Nvidia in the data center field. In the latest quarterly financial report, AMD's data center revenue was US$2.8 billion, while Nvidia's data center revenue was US$26.3 billion.

However, AMD is taking action, announcing the acquisition of ZT Systems last month, which will further enhance its ability to provide infrastructure for hyperscale computers.