Advanced Micro Devices (NASDAQ:AMD) officially leap-frogged Intel (NASDAQ:INTC) with its 7nm CPU desktop announcement at Computex on May 28. This should ensure market share gains for AMD for 2019 and possibly in 2020.
AMD’s Ryzen chip refresh offers a number of technical advantages: better performance, higher power efficiency, and better price/performance. In the very near-term, Intel has a product mix of high-performance chips that are good enough for gamers. It has plenty of marketing resources to support the chip’s brand awareness in the gaming market. Enterprise customers may still choose Intel-powered laptops and desktops, given the wider array of choices compared to AMD-powered solutions.
In the medium term, AMD’s technical advantages may sway buyers to switch out of Intel. If the price difference is wide enough, and AMD-powered solutions offer more power and CPU cores, Intel’s market share will erode.
As an investment, AMD should impress shareholders. At a significantly smaller size, both in cash on hand and by headcount, AMD developed a better desktop CPU and enterprise EPYC solutions than Intel. Specifically, the 12-core 3900X outpaces Intel’s next 10-core chip.
Your Takeaway
Both Intel and AMD are good investment options, depending on your objective. Intel trades at value levels and pays a good dividend yielding 2.82%. AMD has the potential to increase its growth rates in the next two to three years.
