Advanced Micro Devices (NASDAQ:AMD) peaked at nearly $60 in mid-February. Since then, shares traded at lower highs and continues to head lower. AMD has computer chip products for the desktop and enterprise that are several generations better than that of Intel (NASDAQ:INTC). In the graphics segment, Nvidia (NASDAQ:NVDA) is still a better choice. Where does that leave AMD stock? Chances are good that the stock may continue pulling back.
AMD trades at 27 times forward earnings with a PEG of 4 times. Intel may have inferior products but it is slowly turning the corner. Plus, its retail and commercial channel is vastly better and bigger than AMD. On the PC segment, enthusiasts may buy an AMD-powered laptop. But the mainstream user will buy an Intel-powered laptop at BestBuy (NYSE:BBY), Lenovo, or at Dell (NYSE:DELL). There is a more promotional presence for Intel products.
Investors get paid a modest, but meaningful dividend yielding 2.44% with INTC stock.
In the GPU space, Nvidia may trade at rich valuations (a PEG of 5 times) but it has a lead in the GPU server space. Its gaming cards have a better performance relative to its price.
Takeaway
The continued breakdown in stocks will send AMD stock lower at a higher beta. Be cautious in holding AMD even after the stock gave up its gains from the $48 - $50 rebound levels.
