Intel vs. AMD: Gauging the Better Tech Stock Investment

Intel and AMD hold pivotal roles within the technology sector, yet when it comes to investment reliability, one appears to stand out. The tech landscape is witnessing a resurgence, with AI advancements such as the release of ChatGPT by OpenAI reshaping corporate strategies towards generative technologies. Consequently, enthusiasm for AI has been a boon for the tech market, exemplified by the Nasdaq-100 Technology Sector's impressive 75% surge since last year’s outset.

Parallel growth is observed in sectors like virtual/augmented reality, cloud computing, automotive, e-commerce, and more, which contributes to the escalating expansion of tech. Investing in this sector may thus be considered a prudent strategy given its current trajectory.

Intel (INTC) and Advanced Micro Devices (AMD), as semiconductor producers, are central to this tech boom. They supply the essential chips that enable various technologies to operate, and their demand is projected to climb alongside the sector's growth.

By assessing the two leading chipmakers, we can evaluate whether Intel or AMD is the superior tech stock choice at this time.

Intel

Despite a mere 17% increase over the past decade, Intel is showing signs of resurgence after losing ground to AMD in CPU market share and parting ways with Apple. Intel's complacency with its technology let competitors gain an edge, but it's now fighting back by transforming its operations, including a shift to an internal foundry model, positioning it as a serious contender against Taiwan Semiconductor Manufacturing.

Intel anticipates significant cost savings and targets an adjusted gross margin of 60%. Its latest earnings report reflects narrowing operating losses for its foundry segment, indicating a move in the right direction. Intel's AI-focused chip developments further position it as a potentially lucrative investment for the future.

Advanced Micro Devices

AMD has seen extraordinary growth, with its stock value increasing nearly 4,000% in a decade, enhancing its CPU market share and securing key positions in the GPU market. Its exclusivity in supplying chips for gaming consoles like Sony's PlayStation 5 and Microsoft's Xbox Series X|S, and recent forays into AI, set the company apart. AMD's first-quarter earnings surpassed expectations, and despite a slight dip post-earnings, its heavy investment in AI and consistent revenue growth in its client segment underscore its promise for sustained progress.

Is Intel or AMD the better tech stock?

When it comes to pure value, Intel's stock seems more enticing with more favorable forward price-to-earnings (P/E) and price-to-sales (P/S) ratios. Nevertheless, the primary concern is identifying the superior tech stock, and AMD appears to hold that title. AMD's broad industry partnerships and swift expansion, notably in AI, enhance its appeal. Also, AMD’s solid financial health, indicated by its positive free cash flow in contrast to Intel's negative figures, underscores AMD as the more stable choice in the tech sector despite its premium stock valuation.

Intel, AMD, Investment