Increased demand for artificial intelligence (AI) services created steep competition amongst tech corporations, particularly within the chip market. Hardware like graphics processing units (GPUs) are crucial to training AI models, making a lucrative opportunity for the businesses developing these chips.
Nvidia took the lead in AI GPUs, which led its stock price and earnings to skyrocket over the past yr. Nevertheless, eyes have also been on chipmakers Intel (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD), which launched competing chips and will offer significant gains because the industry expands.
Intel launched latest AI accelerators this yr and is expanding its manufacturing division with hopes of becoming a number one AI chip fabricator. Meanwhile, AMD’s second-largest market share in GPUs could grant it a lucrative role with AI in the long run, allowing it to fill in the availability gaps that Nvidia may not have the opportunity to satisfy.
These corporations are at earlier stages of their AI journeys than Nvidia, but that would mean they’ve more room to run in the approaching years. So let’s compare these chipmakers and determine whether Intel or AMD is the higher AI stock at once.
Intel
Shares in Intel trickled up 3% over the past month as Wall Street appears to be getting behind its long-term potential. The expansion is a welcome change after a yr of declines, which had seen its share price tumble 7% since last July. The corporate concerned investors with multiple quarters of disappointing results because it navigated increased competition and changes within the chip market.
Nevertheless, crucial changes to Intel’s business model over the past yr show the corporate playing the long game, making significant investments in its future now to potentially see major gains over the subsequent decade.
First, the tech giant is looking for an even bigger role in AI by launching its Gaudi 2 and Gaudi 3 accelerators, that are able to running AI workloads for data centers. Intel is setting itself other than rivals like AMD and Nvidia by offering competitive pricing, with its chips costing roughly a 3rd of the worth of comparable products in the marketplace.
Nevertheless, essentially the most promising development is Intel’s big bet on becoming a number one player within the foundry market. In line with Allied Research, the semiconductor foundry market was price about $107 billion in 2022 and is expanding at a rate that may see it greater than double to $232 billion by 2032. Meanwhile, Intel plans to open chip fabs throughout the U.S. as it really works to turn into the country’s primary chipmaker, just as GPU demand is soaring.
Getting began in chip manufacturing is expensive, and Intel doesn’t expect to interrupt even on the enterprise until 2027. Nevertheless, the move could significantly repay over the long run, as Intel advantages from increased chip demand across tech.
Advanced Micro Devices
AMD has turn into an organization to look at over the past yr, because it restructured its business to prioritize AI. The corporate made promising headway within the industry, launching its own AI GPUs and signing clients like Microsoft and Meta Platforms.
Moreover, Tom’s Hardware reported last month that AMD had serious inquiries about constructing an AI cluster that may house at the least 1.2 million GPUs. For reference, the very best supercomputers on the planet are run with lower than 50,000 GPUs. Consequently, landing this sort of deal could provide a significant boost to AMD’s earnings.
The chipmaker has exciting prospects within the industry. Nevertheless, it was let down by recent earnings. In the primary quarter of 2024, revenue rose 2% yr over yr to only over $5 billion. AMD posted revenue gains of over 80% in its data center and client segments. That said, it suffered greater than 40% in declines in its client and gaming segments.
So despite an expanding position in AI, AMD still has a number of work ahead to rally investors with financial growth.
Is Intel or AMD the higher AI stock this July?
Intel and AMD have taken different approaches to AI. Intel is trying to distinguish itself within the industry by offering a wide selection of chips and investing heavily in manufacturing. Meanwhile, AMD goals to turn into an equal to Nvidia.
Nevertheless, Nvidia’s estimated 90% market share in AI GPUs will likely be difficult to beat, suggesting Intel might need a greater time expanding within the industry than AMD.
Furthermore, this chart compares the valuations of Intel and AMD using two key metrics: price-to-earnings and price-to-sales ratios. For each metrics, the lower figure signals a greater value. Consequently, the info indicates Intel is potentially trading at a bargain in comparison with AMD.
Along with a promising enterprise into the foundry market, Intel is a no brainer this July and a greater AI stock than AMD.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Idiot recommends Intel and recommends the next options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.
Higher Artificial Intelligence (AI) Stock: Intel vs. AMD was originally published by The Motley Idiot