AMD vs. Intel Stock: Better Semiconductor Turnaround Candidate

Alright, let's dive into the world of semiconductors and compare two of the biggest players in the game: AMD and Intel. We're going to look at their recent performances, strategies, and potential for growth to determine which one is the better turnaround candidate. So, buckle up, folks, because we're about to get technical!

First things first, let's talk about AMD. This company has been on a roll lately, with its stock price skyrocketing nearly 4,000% over the past decade. AMD's CPU market share has risen from 18% in 2017 to a whopping 33% this year. The company has also made significant strides in the GPU market, becoming the second-largest player and securing exclusive supply deals with Sony's PlayStation 5 and Microsoft's Xbox Series X|S. To top it off, AMD has been investing heavily in AI, developing GPUs to rival market leader Nvidia's offerings.

Now, let's take a look at Intel. This company has been struggling for quite some time, losing market share in CPUs to AMD and ending a long-standing partnership with Apple. Intel's stock price has only risen by 17% over the past 10 years, and the company has been in a slump for quite some time. However, Intel appears to be turning things around, revamping its entire business model and announcing plans to become the biggest semiconductor manufacturer in North America and Europe. The company expects its new model to save between $8 billion and $10 billion by 2025 and help it achieve non-GAAP (adjusted) gross margins of 60%.

So, which company is the better turnaround candidate? Well, let's look at some key indicators and catalysts for both AMD and Intel.

For AMD, we've seen explosive sales growth in its data center business, improved gross margin, and strong sales growth in its client segment. The company's acquisition of ZT Systems, a specialist in designing and deploying data center infrastructure for artificial intelligence, further expands its portfolio of AI services and positions it for continued growth in the AI market. AMD's fabless model has proven to be highly successful in recent years, allowing it to focus on designing high-performance chips without the overhead of manufacturing.

On the other hand, Intel's IDM strategy has faced challenges, with the company's revenue down 1% year over year in the second quarter of 2024 and a net loss of $1.7 billion. Intel has announced plans to cut expenses by $10 billion and suspend its dividend starting in the fourth quarter. However, Intel's IDM strategy has some advantages, such as its ability to provide chipmaking services to other companies and its receipt of significant government support for semiconductor manufacturing in the U.S.

In conclusion, while Intel's IDM strategy has some advantages, AMD's fabless model has proven to be more successful in recent years. AMD's strong financial performance, partnerships with leading AI companies, and acquisition of ZT Systems position it well for long-term success in the AI era. However, it is essential to monitor both companies' progress and adapt to the rapidly evolving AI market.

So, which semiconductor stock is the better turnaround candidate? Based on the data and trends we've discussed, AMD appears to be the better choice. But remember, this is just one person's opinion, and it's always important to do your own research and consider your personal investment goals and risk tolerance. Now, go forth and invest wisely!