Earnings Outlook: AMD earnings: Intel’s data-center surge will be a tough act to follow

Advanced Micro Devices Inc.’s sales of server chips may get heightened scrutiny following a surprise jump in data-center sales reported by larger rival Intel Corp.

AMD AMD, -2.63%shifted the power balance against bigger rival Intel Corp.INTC, +8.13% last year as it released its 7-nm “Rome” chips while Intel failed to bring its 10-nm chip to the market. In chip parlance, nanometers, or nm, refers to the size of the transistors that go on a computer chip, with the general rule being that smaller transistors are faster and more efficient in using power.

AMD’s forceful re-entry into the server business, which had been completely dominated by Intel for many years, was a big part of its turnaround. AMD’s Epyc line of data-center chips fall under the company’s enterprise embedded and semi-custom segment, and analysts expect sales in that segment to rise 39% to $603.8 million when AMD reports fourth-quarter earnings after the bell on Tuesday.

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Expectations may have been changed, however, after Intel topped Wall Street estimates for data-center sales by about $800 million. AMD shares fell 2.6% Friday in the wake of Intel’s report, as Intel stock enjoyed its best day in two years and hit its highest prices since the dot-com bust.

That was a rare drop for AMD — In addition to being the best performing stock on the S&P 500 indexSPX, -0.90% for the second year in a row, AMD shares recently topped their dot-com bubble highs to set new records, and promised an even bigger year in 2020 with the release of several new chips at CES. If it wants to keep that run going, AMD may have to produce a big beat on server sales to match its biggest rival.

What to expect