AMD and Intel are among the largest processor manufacturers in the world, to determine which of these shares is the best to buy, it is worth taking a look at the financial results, their market assessment and development prospects.
Intel (INTC), with a market capitalization of $ 227 billion as of July 13, is still the global leader in PC CPU sales and is gearing up for significant capacity expansion.
Advanced Micro Devices (AMD) is a fast growing competitor that benefits from Intel manufacturing delays. AMD capitalization is estimated by the market at about $ 108 billion, and shares are growing amid optimistic analysts’ estimates.
Intel vs. AMD – Whose Financial Performance is Better?
According to Mercury Research, an international research firm in the PC component industry, Intel had a dominant share of the x86 (x86 CPU) market in the first quarter of 2021 at 79.3% versus AMD’s 20.7%.
However, if we compare the data with last year, it turns out that Intel has lost part of the share of this market, as much as AMD’s share has grown. At the same time, AMD lost market share slightly in the first quarter of 2021 compared to the previous fourth quarter of 2020.
Comparing Intel and AMD’s sales growth, AMD is the best performer, with an average growth rate of 52.7% in its last six quarterly revenues, while Intel has a 6.7% growth rate, with revenue declining for the last three quarters.
Profit statistics for Intel and AMD are also the opposite – AMD’s gross and operating margins are growing over the past year, while Intel is declining.
However, Intel outperforms AMD in such an important economic indicator as free cash flow – the company’s working capital available to invest in the development and expansion of production or to increase share buybacks or dividends.
Intel pays dividends, but AMD does not, which is also a significant difference for many investors.
AMD is the market darling
An analysis of Intel and AMD stocks clearly shows higher analysts and investor valuation of AMD stock.
Of all Intel stock analysts, 40% give it a buy recommendation rating, with an average target price of $ 66.27 versus $ 56.87 at the close of trading on Tuesday, representing a 16.5% upside potential for the next 12 months.
AMD shares receive a higher percentage of buy recommendations from analysts, namely 59%, with an average target price of $ 105.65 predicting a 17% rise from Tuesday’s closing price of $ 90.3 per share.
Since early 2021 and over the past 12 months, Intel shares are up 14% and down 2.9%, respectively, while AMD shares are down 1.6% and up 68.4%, respectively.
Intel vs. AMD: Development Prospects
Market experts praise AMD for the past few years under the leadership of CEO Lisa Su. AMD is looking to expand its market share in both the CPU, GPU and data center markets. However, its competitors are such giants as Intel and Nvidia (NVDA), and they have much more financial opportunities for growth and development.
In the GPU market, Nvidia dominates with a share of 81%, while AMD’s share is also quite large – 19% in the fourth quarter (data from Mercury Research).
Competition for data center GPUs is also expected to intensify as Intel begins shipping its own data center GPUs, codenamed Ponte Vecchio, in the fourth quarter or early 2022.
A big argument in favor of Intel for investors can be the implementation of strategic initiatives of its new gene. director Pat Gelsinger for the construction of two new processor factories in Arizona. In addition to increasing its own chip production, Intel plans to become a contract manufacturer for other chip developers, in the same way as Taiwan Semiconductor Manufacturing (TSM), the world’s largest contract chip manufacturer.
The capitalization of NVDIA and TSM as of July 13, 2021 was $ 500.9 billion and $ 559.6 billion, respectively.