As Intel’s stock comes under heavy pressure, shares of rival Advanced Micro Devices are only getting hotter.
AMD’s stock certainly hasn’t been doing badly lately: It cruised to a ninth consecutive day in the green on Friday, rising more than 27% over that span. But one analyst thinks that AMD is getting even more love as investors get a wake-up call about its competitor, whose shares had been doing better in recent weeks.
“Everything that [Intel] said on their call is very good for AMD,” Mizuho trading-desk analyst Jordan Klein said in a Friday note.
One problem that Intel highlighted is a massive supply crunch that’s forcing it to shift capacity away from its personal-computer business as it tries to meet more demand in its data-center business. And while Intel isn’t alone in facing supply challenges, Klein thinks AMD is in a better spot to meet customer demand because it sources its chips from Taiwan Semiconductor Manufacturing Co., whereas Intel both outsources manufacturing and makes its own chips.
According to Klein, AMD’s server central processing units are more popular with hyperscalers than Intel’s. Therefore, he thinks Intel’s commentary, which noted that hyperscaler demand has vastly exceeded prior expectations, bodes well for AMD, whose fifth-generation Epyc processor outperforms Intel’s chips, he said.
Meanwhile, AMD’s stock is “a lot cheaper” than Intel’s, Klein added, while the company is also spending less money, seeing higher revenue growth and sporting better margins.
Much focus has been on AMD’s competition with Nvidia in the world of graphics processing units for artificial intelligence. But the market for server CPUs, which pits Intel against AMD, is increasingly of interest. AMD is now almost completely sold out of its server CPUs for the year, according to KeyBanc analyst John Vinh.
Additionally, AMD has more skin in the AI game than Intel, with “a real AI product offering” in its Instinct series of accelerators, in Klein’s view. Investors are waiting to see how its first rack-scale solution, Helios, will stack up against Nvidia when it rolls out in the second half of this year.
Having ended Friday’s session in positive territory, AMD’s stock clinched its longest winning streak since Nov. 19, 2019, according to Dow Jones Market Data. Intel’s stock, meanwhile, was off 17% in Friday’s session for its worst day in a year and a half.
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