MarketWatch First Take: AMD’s third-generation Milan server chip could propel more sales

United States

Advanced Micro Devices Inc.’s third-generation server chip, code-named Milan, is expected to propel more sales for the chip maker in the computer server market.

Earlier Monday, AMD AMD, +1.79% launched the 7-nanometer version of EPYC, its Zen 3-based processor, in a virtual presentation. The EPYC 7003 Series was designed for the corporate server market, high-performance computing and the cloud. AMD executives noted it was also especially critical for today’s changing and remote workforce. A group of new and current customers adopting the chip includes Cisco Systems Inc. CSCO, +1.21%, Tencent Cloud and’s AMZN, -0.25% AWS.

Milan is a follow-on to the company’s second-generation EPYC server chip, often called Rome, which helped AMD gain market share in the server market that for years has been dominated by Intel Corp. INTC, +1.41%. This next, more powerful chip is expected to further fuel AMD’s market-share gains, possibly leading AMD into the double-digits.

“With the launch of EPYC Milan, we expect investor sentiment to remain reflective of an expectation of AMD’s server-CPU chip share accelerating to 20-30%-plus over the coming 12-18 months,” said Wells Fargo analyst Aaron Rakers, in a note to clients. He noted that according to Mercury Research, AMD ended 2020 with an approximate 9.2% share of the x86 server market, for chips shipped to customers.

AMD first launched the EPYC family in 2017, its reentry into the server market after an absence of several years. Server chips are higher-performance and costlier than PC chips, and also more profitable. Investors have been banking on big upside for AMD as it gradually inches its way back into the arena long dominated by Intel.

Shares of AMD rose slightly on Monday, closing at $ 82.50. The company expects to see more than 100 systems based on EPYC launched by the end of 2021. Intel is also expected to launch its much-anticipated Ice Lake processor in the coming weeks.