AMD, Intel slip as BofA cuts PC estimates for first half of 2023
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Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) both slipped fractionally Tuesday as Bank of America lowered its PC estimates for the first half of 2023 following a series of industry checks at the Consumer Electronics Show.
Analyst Vivek Arya, who has a buy rating on AMD (AMD) and an underperform rating on Intel (INTC), lowered his 2023 earnings-per-share estimates by 6% and 9%, respectively. Arya pointed to Intel's (INTC) "soft-guiding" for the first-quarter of 2023, and how the chip giant recently said it expects sales to be "no-better" than the historical seasonal downturn of 6% to 9% sequentially.
"There are additional concerns of Intel pricing its products more aggressively to capture share and taking advantage of incremental capacity," Arya wrote in a note to clients.
Arya added that he sees some "near-term caution" as well as "measured" spending in the cloud and enterprise markets. However, Arya added that there should be signs of recovery in the second half of the year as new server CPU products such as Intel's (INTC) Sapphire Rapids and AMD's (AMD) Genoa chipsets start to ramp up and demand in China begins to recover.
For the PC market, Arya believes that the biggest debate among investors is the size of the total addressable market in 2023, and whether it could be between 270M and 295M units or as low as 260M, which it was prior to COVID.
Arya said that he believes shipments for PCs are more likely to be between 250M and 255M units before the situation recovers to the 260M level of prior years.
There's also a concern that Apple (AAPL) is increasingly taking market share, with 10% to 15% of the PC market going to Arm-based processors that are believed to be mostly used in Mac computers.
Regarding the server space, Arya noted there are some "cycle risks," but that AMD (AMD) is continuing to gain share in the lucrative market. Arya said he anticipates "a healthy ramp" for AMD's 5-nanometer Genoa chipset over the Intel 7 Sapphire Rapids products set to be launched this week. Arya added that AMD (AMD) could have as much as 28% of the server market in 2023, up from 23% in 2022 and ultimately get to 31% next year. 
Last month, investment firm UBS picked AMD (AMD) among its top semiconductor stocks for 2023, noting that momentum in the sector is likely to build in the back half of the year.