Analysis: AMD’s Bullish Remarks Contrast To Intel’s Market Challenges

After Intel executives spoke of ‘competitive pressure’ and a need to ‘stabilize market segment share’ for its CPU business two weeks ago, AMD makes clear that it has been contributing to its larger rival’s challenges in the market. The two also differ in their outlooks for the rest of the year.

After Intel executives spoke of “competitive pressure” and a need to “stabilize market segment share” for its CPU business two weeks ago, AMD leaders made clear on Tuesday that the firm has been contributing to its larger rival’s challenges in the market.

The two semiconductor companies also offered a great contrast when it came to their respective outlooks for the rest of the year in the face of economic uncertainty.

On AMD’s earnings call that day, CEO Lisa Su (pictured above left) made several bullish statements about its CPU business for the first quarter, including her claims that it gained server CPU share and increased revenue share in the client CPU segment for a fifth consecutive quarter.

While Mercury Research has yet to release share figures for the first quarter, the firm previously said for last year’s fourth quarter, AMD’s server CPU share stood at 25.1 percent, up 0.9 points sequentially and up 2 points year over year, while its client CPU share was 24.6 percent, up 0.7 points sequentially and up 4.5 points year over year.

But AMD isn’t just gaining market share at Intel’s expense. The company is also apparently doing a better job at enticing customers to buy its newest and fastest CPUs rather than previous generations or slower models, resulting in higher average selling prices.

Most notably, Su said the company “delivered record client CPU” average selling prices driven by a “richer mix” of high-end desktop and mobile Ryzen processors, noting “strong demand” for its latest AI PC processors, the Ryzen AI 300 series.

As for server CPUs, Su said the ramp of its latest, fifth-generation EPYC “Turin” CPUs contributed to share gains while also citing “sustained demand” for the previous generation. She added that more than 30 new cloud instances based on the latest EPYC chips have been launched, with more expected later this year. AMD also expects “enterprise adoption to accelerate” with over 150 Turin platforms arriving this year.

The “strong” demand AMD saw for its EPYC CPUs as well as “significant double-digit percent” growth for its Instinct GPUs resulted in the company’s data center segment growing 57 percent year over year to $3.7 billion for the first quarter.

Its client and gaming segment, on the other hand, grew 28 percent year over year to $2.9 billion in the first quarter, with client revenue alone growing 68 percent year over year.

The company didn’t think much of this happened as the result of customers making earlier-than-expected purchases in anticipation of prices increases from tariffs.

“We are spending quite a bit of time ensuring that we are aligning with our customers, looking at inventory levels, looking at consumption and overall sell-through, and we believe that we have a good overall inventory position,” Su said.

“There is not, let’s call it, a tremendous amount of pull ins or other things that are coming into play, and we will continue to be very agile in how we look at that going forward,” she added.

Su said she expects AMD to continue gaining market share in the server and client CPU segments this year, which is one of two major reasons the company remains “confident” it can “deliver strong double-digit revenue growth in 2025.” (The other main factor is AMD’s nascent but fast-growing Instinct GPU business for AI data centers.)

This optimism about AMD future growth prospects has prompted the company to boost spending in several areas, including product and technology road maps as well as go-to-market initiatives, full-stack AI software and data-center scale solutions, the CEO said.

“Despite the uncertain macroeconomic backdrop, our first-quarter performance highlights the strength of our differentiated product portfolio and execution and positions us well for strong growth in 2025,” Su said.

Intel Notes ‘Competitive Pressure,’ Demand For Older CPUs

Intel, on the other hand, offered a much more mixed assessment of its CPU business across the client and server segments in its first-quarter earnings call, where its new CEO, Lip-Bu Tan (pictured above right), spelled out his plan to turn around the company.

David Zinsner, the company’s CFO, said Intel Products revenue in the first quarter was $11.8 billion, down 10 percent sequentially and roughly unchanged from the same period last year but “above our expectations.”

“We believe [first-quarter] revenue benefited from customer purchasing behavior in anticipation of potential tariffs, though it is difficult to quantify the magnitude,” he said.

One of the contributors was the Client Computing Group, whose revenue was down 13 percent sequentially and down 8 percent year over year to $7.6 billion. This was “below typical seasonality and in line with expectation, with higher-than-expected volumes offset by product mix and competitive pressure,” he said.

The other factor was the Data Center and AI group, whose revenue declined 5 percent sequentially but increased year over year to $4.1 billion. This was “above expectations, driven by hyperscaler demand for host CPUs for AI servers and storage compute,” he said.

In contrast to how AMD is steering more customers towards its latest CPUs, Intel said it’s having greater success with selling older CPUs across the client and server segments, with the possible exception being commercial customers in the PC market.

On its earnings call, Intel Products CEO Michelle Johnston Holthaus said the company is seeing “much greater demand” for its two previous generations of client CPUs, including the “Raptor Lake” parts, which is leading to shortages on its Intel 7 manufacturing node.

Zinsner also noted that sales of Intel’s AI PC processors, including its latest “Lunar Lake” CPUs, were lower than expected.

The issue, according to Holthaus, is that macroeconomic concerns, including President Trump’s ever-changing tariff regime and the ensuing trade war it’s causing, have “everybody kind of hedging their bets and what they need to have from an inventory perspective.”

While Holthaus called Intel’s “Lunar Lake” and “Meteor Lake” processors for AI PCs “great parts,” she said they have a “much higher cost structure, not only for us” but also for the company’s OEM partners as well.

“So as you think about an OEM perspective, they’ve also ridden those cost curves down from a Raptor Lake perspective, and it allows them to offer that product at a better price point,” she said.

However, Holthaus indicated that this dynamic is likely playing out more on the consumer side, noting that Intel is still seeing “very strong commercial demand” for its AI PC chips.

But when it came to server CPUs, Intel struggled to generate more interest for its latest Xeon 6 CPUs in the first quarter, with Holthaus saying that the company is “seeing strong demand on older-gen parts in data center.”

While Holthaus said the Xeon 6 “Granite Rapids” CPUs are “great products” and noted “excitement” from customers around data center consolidation and edge AI projects, she noted that there is “good competition.”

She added that while Intel has “strength both in hyperscalers and enterprise,” the company is seeing “market segment share challenge” in the “rest of the world.”

“I stated in last quarter’s earnings, I talked about our main goal being to stabilize market segment share, create margin and drive up [average selling prices], and so those are things that we’re going to be laser focused on for the remainder of the year,” she said.

Whereas AMD expects double-digit revenue growth this year, Zinsner said “very fluid trade policies” set by the United States and other countries are helping increase the “chance of an economic slowdown,” which prompted Intel to expect a slump in near-term sales.

As a result, Intel is forecasting revenue of $11.2 billion to $12.4 for its second quarter, a “wider-than-normal” range that would represent a decrease of 2 to 12 percent sequentially in contrast to what has historically been flat growth.” This would also result in a 3.1 to 12.5 percent decline from the same period last year.

“While we have yet to see a meaningful change in customer buying patterns, we think it’s prudent to manage the business with a level of conservatism going into the second half of the year,” Zinsner said.