Although several chip stocks had convincing performances in 2024, Watch(NASDAQ: INTC) and Advanced Micro Devices(NASDAQ: AMD) Not among them. Intel's shares fell by about 60% last year, while AMD shares were down about 18%.
Let's explore which semi -conductor stock looks like the better bounce candidate in 2025.
In a semi -conductor market that is largely driven by Artificial Intelligence (AI)Intel and AMD have largely been back in -house. AMD is the Remote 2 Designer Graphic Processing Units (GPUS) Behind the Market Leader Nvid. Meanwhile, the Intel market share in GPUs has fallen to nothing, although it was not a distant fall, with the company with only 2% market share in PC graphics cards in 2023.
AMD has struggled against Nvidia, mainly due to its inferior software. In a recent study, semianalysis called GPUs outside the AMD box is “unused” for AI training, noting that “multiple teams of AMD engineers” are needed to help them repair software bugs . However, AMD has been able to carve a creek in a collection, with semianalysis saying that its customers usually use AMD GPUs for narrow, well -defined collection use cases.
Nevertheless, AMD has been able to see the growth of strong data centers, although it is not at the same scale as Nvidia. The last quarter, its revenue surge saw a 122% year -on -year data centers revenue and 25% in a row to $ 3.5 billion. The company credited its central processing units intuition and EPYC (CPUs) for the jump in sales.
CPUs act as a computer brain, while GPUs have higher processing power. Although there is a lot of deserving attention on GPUs, AMD has been making a good leap in the CPU market, indicating that it has been taking a share in the CPU server market while it has also been doing well in the PC market .
Overall, AMD saw its Q3 revenue climbing 18% to $ 6.8 billion and its modified EPS jumps 31% to $ 0.92. So the company has still been growing nicely despite the fall in the price of its stock.
On the other hand, Intel saw its last quarter revenue decline 6% to $ 13.3 billion, and its modified EPS turned to a loss of -$ 0.46 against a profit of $ 0.41 a year ago. The same bright place last quarter was its data center and segment, which saw revenue rise by 9% to $ 3.3 billion. However, compared to Nvidia and AMD, that is very modest gains in this segment.
Meanwhile, saw its biggest segment, client computing, its revenue decreases by 7% to $ 7.3 billion. By comparison, AMD saw its client's segment revenue surge 29% last quarter to $ 1.9 billion, showing that it was doing some action on Intel's primary PC business.
Perhaps Intel's largest woe, however, derives from his foundry segment, which has been dragging great on its consequences. The company has poured money into this business through capital expenditure (CAPEX), building new manufacturing facilities. However, the segment has consistently been a big money loser, including reporting an active loss of $ 5.8 billion last quarter, or $ 2.7 billion in excluding Noncash impairment charge.
Following the departure of his CEO Pat Gelsinger, Intel has said he could try to derive his foundry business. The business recently received $ 7.86 billion in direct funding and 25% investment tax credit from the government to continue to build its US footprint
In terms of pricing, Intel is the cheaper stock, trading at a price-to-on-ears ratio (P/E) 12.6 times versus 17.6 times for AMD.
However, if you appreciate Intel's core business separately and its foundry business, its valuation is even more attractive.
Intel's foundry business has been losing a lot of money, but it also has many physical assets. Intel has spent $ 68.5 billion in Capex, mainly on the foundry business, since the end of 2021 and has $ 104 billion in physical assets on its balance sheet. If only take its recent Capex expenditure and pull its $ 26 billion in net debt, its foundry business would be worth about $ 10 per share at 4.3 billion in shares. He also owns an 88% share in Mobileyeworth about $ 11.4 billion, or $ 2.66 per intel share.
As such, it is not surprising that the company has been subject to occupation rumors. There are many hidden physical assets that are not reflected in its share price, not to mention direct funding and government tax incentive.
Meanwhile, AMD has certainly been stronger of both businesses, although it has not been respected by the investor. If more AI infrastructure turns towards AI collection, it could be in good place. Meanwhile, investors should not ignore its CPU business, which has been gaining a share in data centers and personal computers.
I like both stocks as turning candidates this year. I like Intel a little more because of the deep value I think is still in stock. However, AMD also looks like a solid bounce candidate. Fortunately, investors do not have to choose and can add both stocks to their portfolios if they choose.
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Geoffrey Biler He does not have a position in any of the stocks mentioned. The Motley Fool has jobs in and recommends advanced micro, Intel, and Nvidia devices. The Motley Fool recommends the following options: Short February 2025 $ 27 calls on Intel. The fool has motley and Disclosure Policy.
