On Wednesday, Citi reported that March notebook shipments saw a significant surge, increasing by 44% month-over-month (MoM), a figure that far exceeded their initial projections of a 21% rise. This increase was attributed to a combination of pull-in demand and the introduction of new models.
Despite a quarterly decrease, the first quarter of 2024 (1Q24) notebook shipments declined by only 5% quarter-over-quarter (QoQ), which was notably better than Citi's anticipated 12% decrease and the typical seasonal trend of a 17% downturn.
Citi analysts suggest that these stronger-than-expected shipment figures for 1Q24 are positive indicators for both Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NASDAQ:AMD). The firm anticipates that this performance will likely lead to an increase in PC microprocessor sales for both companies during the first quarter of 2024.
Looking ahead, Citi's notebook analyst forecasts that notebook shipments are expected to rise by 4% QoQ in the second quarter of 2024 (2Q24E), which is below the usual seasonal increase of 10% QoQ.
Despite this more modest outlook, Citi has decided to maintain its "Buy" rating on AMD stock, driven by the potential upside from the company's involvement in artificial intelligence (AI). Conversely, Citi continues to hold a "Neutral" rating on Intel, citing concerns over reduced profit margins due to the company's unsuccessful expansion into the foundry business.
InvestingPro Insights
Amidst the positive momentum in the semiconductor sector, Advanced Micro Devices (AMD) presents a mixed bag of opportunities and challenges. According to InvestingPro data, AMD boasts a robust market capitalization of $265.68 billion, reflecting its significant presence in the industry.
The company's revenue for the last twelve months as of Q4 2023 stands at $22.68 billion, with a gross profit margin of an impressive 50.27%, indicating strong profitability in its core operations.
InvestingPro Tips highlight that AMD is expected to experience net income growth this year, which aligns with Citi's optimistic view on the company's prospects due to the surge in notebook shipments.
Moreover, AMD's stock has delivered a high return over the last year, with a 77.94% price total return, showcasing its potential for delivering value to investors. Still, it is essential to note that AMD is trading at a high earnings multiple, with a P/E ratio of 311.08, suggesting that the stock might be priced optimistically relative to its earnings.
For investors looking to delve deeper into AMD's financials and future prospects, InvestingPro offers a wealth of additional tips, including insights on the company's valuation multiples and stock price volatility. To access these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. There are 16 more InvestingPro Tips available that can help inform your investment decisions regarding AMD.
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