Analyst: AMD’s PC Revenue To Drop 26 Percent in 2022 YoY

An analyst for Morgan Stanley has some bad news for AMD: 2022 is going to be a rough ride. The financial firm had previously paused its coverage of the PC industry, but has restarted it with a report from analyst Joseph Moore. He predicts a tough year-over-year (YoY) forecast for AMD, but notes that the company isn’t alone in this regard.

Moore believes in both 2022 and 2023 AMD will experience what he termed a “material correction.” We’re guessing that means the olden days of pandemic-fueled record business are over. The decline of crypto mining will also have a significant impact on AMD’s bottom line. The most surprising part of his analysis is that he thinks AMD’s PC-related revenue will drop 26 percent YoY. He says it will also lose some PC market share “in part” to Intel’s success with its 12th Gen Alder Lake CPUs. Moore doesn’t expand on why it might suffer such heavy losses. However, the entire industry is facing some strong headwinds right now as inflation continues roils markets.

Despite the dour outlook for 2022, Moore thinks AMD’s revenue will only decrease by two percent in 2023. In addition, he expects the company to make “minor share gains” with PC clients, and “material gains” with its Epyc server products. “Overall we are optimistic that the company’s prospects in [the] data center will provide enough growth to drive further positive estimate revisions over the next several quarters,” he said. In addition, he also expects the company to make major gains in the notebook market this year. He expects its revenue from notebooks to increase 35 percent. That will be followed by AMD taking market share from Intel in 2023.

The point of Moore’s prognosis is to advise investors about AMD’s future outlook. Like all tech companies, its stock has taking a beating lately. It’s lost half its value in the past six months, going from $150 a share in January to its current price of $73. However, its shares rose one percent in the wake of Moore’s report according to Seeking Alpha. The reason is despite a difficult near-future outlook, he believes it will fare much better in 2023. Moore also established a per-share target of $103, and noted the shares’ current price is a “reasonable valuation.”

Although Moore is focused on AMD for this assessment, he admits the industry as a whole is heading for troubled waters. “The demand picture across all of the end markets is mixed given the plateauing economy,” he wrote. Yes, about that plateauing economy, it seems like the driving force in AMD’s theoretical downturn. Has Alder Lake had a noticeable impact on AMD’s CPU sales? It’s likely, but AMD also didn’t launch a counter-attack against it until the spring of 2022. That’s roughly six months after Alder Lake launched. AMD belatedly released its Ryzen 7 5800X3D along with a raft of new CPUs for AM4 users in the April and May timeframe.

However, there are a lot of forces at work here other than Alder Lake. The crypto mining market is disappearing before our very eyes. Inflation is also causing people to be more judicious in their spending decisions. There’s already enough signs on the horizon that tough times are ahead that Intel is rumored to be cutting prices on its high-end Alder Lake CPUs, which it’s never done before. The world’s largest motherboard manufacturers — Gigabyte and Asus — are also projected to ship 25 percent fewer motherboards this year. That’s also due in part to the end of GPU mining, which is affecting the whole industry.

Overall, it looks like 2022 is going to be a difficult year for all the big name PC companies. There’s now so many GPUs on the market companies like NewEgg are having fire sales. Inflation is the highest it’s ever been, and gas prices are even higher. At the same time, DIY PC builders are hesitant to upgrade with Zen 4 and Raptor Lake on the horizon. The same goes for GPUs with RDNA3 and Ada Lovelace arriving later this year. At the same time, this was all anticipated. At the end of 2021 analysts predicted that as the pandemic fades away, so would the record-breaking sales. Nobody predicted back then that mining would crash too, but it’s adding fuel to the fire too. The current level of inflation was also not anticipated in year-end reports, but it’s obviously not helping matters.

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