PC and server shipments normalize Bernstein maintains "Equal-weight" on Intel (INTC.US), AMD (AMD.US)

Bernstein published a research note to assess the PC and server markets and said that shipments in the third quarter "were largely in line with seasonal trends, up 7% sequentially."Analyst Stacy Rasgon wrote in a note to clients: "Total PC shipments in Q3 were down about 2% YoY, while up about 1% in Q2. The CPU channel now shows signs of normalization, with total CPU shipments only about 2% above PCs, down from about 9% observed in Q2, largely in line with expectations."Rasgon noted that notebook CPU shipments were up about 4% above PCs, up 10% from Q2, "a significant" decline but still slightly above expectations. Desktop CPU shipments were weak, about 4% below expectations.Rasgon added: "Therefore, we believe the PC channel is now starting to show signs of normalization."The analyst currently rates Intel (INTC.US) and AMD (AMD.US) "In-Line" with a target price of $25 and $150, respectively.The firm noted that AMD's market share in notebooks rose about 2 percentage points to 19.2% in Q3, while its desktop market share rose about 6 percentage points to 28.7%. The company's revenue share also increased, to about 27.3% at the end of the quarter, up about 8 percentage points sequentially.Rasgon wrote: "How much of AMD's impressive share growth in Q3 was simply Intel cleaning up its product channel versus more sustainable, remains to be seen, as Intel has been 'incentivizing' sales for the past several quarters. However, we don't see much incentive in Q3 from Intel, which we believe is a sign that the company is working to normalize its channel inventory."Regarding the server CPU market, AMD's unit share growth "slowed slightly," though its revenue share increased.Intel is still struggling in the AI accelerator market, as shipments of its Gaudi AI products this year will be less than $500 million, while AMD is targeting more than $5 billion. Rasgon added: "Looking to 2025, how this number changes remains the biggest question for the stock, especially considering their roadmap is still well behind their larger competitors."