Advanced Micro Devices and Intel compete fiercely in the chip business. Despite Intel’s historic lead in processors, last year for the first time AMD overtook its rival in terms of market capitalization and continues to hold the lead. Both recently posted earnings, with Intel posting its largest quarterly loss in company history. AMD, meanwhile, saw revenue fall 9% as PC chip sales fell sharply. However, both stocks have performed well this year. AMD is up about 26% year-to-date, while Intel is up nearly 18% over the same period. Going forward, does one action have an advantage over the other? CNBC Pro takes a look at what Wall Street analysts are saying about the rivals. AMD For Morgan Stanley, AMD is well equipped for the second half of this year. “Investors are highly skeptical of the 2h data center rebound, but we have a visible line of sight for AMD to gain share from every cloud customer this year,” the bank said in a May 3 note. He was also optimistic about AMD’s new MI300 graphics chip due to launch later this year. While the bank believes it will be a relatively small source of revenue next year, the new chip is “really important to the longer-term narrative and story” as AMD looks to compete with Nvidia in the realm of artificial intelligence. “So overall, it’s been a mixed quarter, but given the selloff, we remain positive on the story,” Morgan Stanley analysts said, after AMD’s stock rose. fell on forecast below expectations. “The companies investors are focusing on – microprocessors and graphics processors for PCs and data centers – are poised to do well from here, with great potential for a 2h upturn, with strong ramps related to products in all areas.” Nonetheless, Morgan Stanley, which has an overweight rating on the stock, lowered its price target from $102 to $97, implying an upside of around 19%. In a May 3 note, Bank of America downgraded AMD to neutral, though that’s higher than Intel, which it rates as an underperformer. But BofA added, “We continue to appreciate AMD’s consistent execution and breadth of product cycles in attractive compute/AI markets.” Bank analysts said they downgraded AMD due to a weak second-quarter outlook on a slow market recovery. “While AMD stock may be under pressure in the near term, we expect some recovery as the company outlines its vision for AI and the growth potential of its unique converged AI product (MI300)” , they wrote. According to FactSet, analysts covering AMD give the stock an average upside potential of 22%. Intel Morgan Stanley believes Intel’s revenue “bottomed out” and margins should recover in the second half. Still, he noted that the company faces a year of “minimal” cash generation, significant market share challenges and “fairly limited growth” once its inventory recovery takes hold. is out of breath. He gave Intel an equal weight mark, with a price target of $31 – a minimal advantage from where it is now. BofA does not expect a “meaningful” year-over-year recovery for Intel until 2024, adding that its near-term outlook for PCs will be exacerbated by Intel price increases. While higher spending in China should help demand recover, the problem of high inventory for longer will affect Intel disproportionately, compared to AMD which outsources its manufacturing, BofA said. The bank gave Intel an underperforming rating, with a price target of $25, implying an 18% downside. According to FactSet, analysts covering Intel give the stock an average upside potential of just 1.3%. – CNBC’s Michael Bloom contributed to this report.
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