AMD gains as Bernstein says PC market 'normalizing' at pre-COVID levels
Andrei Berezovskii
AMD (NASDAQ:AMD) shares rose around 3.5% in early trading on Tuesday as investment firm Bernstein said the PC market looks to be "normalizing" at levels seen prior to the COVID-19 pandemic.
Analyst Stacy Rasgon, who rates both AMD (AMD) and Intel (NASDAQ:INTC) market perform, noted that overall PC shipments were down nearly 30% year-over-year in the first-quarter, but they only look exceptionally bad when compared to levels seen during the pandemic.
"The [roughly] 40M notebook shipments in [the March quarter] may have appeared horrendous given the [roughly] 60M units seen a year ago, however it was dead in-line with pre-COVID Q1 levels," Rasgon wrote in an investor note. "We note that most PC forecasts have the industry returning to pre-COVID levels this year, a trajectory the industry appears to be on at the moment."
Conversely, Intel (INTC) shares slipped around 1.5%.
In addition, Rasgon noted the channel inventory drain in the first-quarter for CPUs was "ugly," but it was "less ugly" than the fourth-quarter, particularly as notebook shipments appear closer to normalizing than desktop PCs.
He pointed out that notebook CPUs under-shipped notebooks by roughly 10% in the first-quarter (compared to 24% in the prior quarter), while desktop CPUs under-shipped desktop PCs by roughly 16%, compared to 11% in the prior quarter.
Rasgon also said that the average selling prices for CPUs are still falling as both Intel (INTC) and AMD (AMD) work to clear channel inventory, though the declines look "particularly extreme" for AMD. Intel's average selling prices fell 6% sequentially, while AMD's fell 19% sequentially.
It's likely that the CPU inventory correction has another quarter or two to go, but Rasgon said a normalization in the back half of the year "seems plausible."
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