Intel, Nvidia, Or AMD: Which Chip Stock Is The Better Buy?

Summary

Intel reported a set of earnings that was pretty decent. However, the market was confused with its ambitious growth plans.

Advanced Micro Devices continues its run of phenomenal results in FY21. Dr. Lisa Su & Co. is making the most out of Intel’s stumbles.

Nvidia will issue its FQ3 report card on 17 November. The company’s growth momentum is expected to continue slowing down.

We discuss which semiconductor stock is the better buy now.

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Advanced Micro Devices, Inc. ( AMD ) issued a fantastic FQ3 report card recently. The company also handily beat consensus estimates and reaffirmed AMD’s position as one of the leading semiconductor companies.

Notably, the company made gains while Intel ( INTC ) reported a set of results that we thought were actually pretty fine. There were some concerns over underwhelming data center performance, but it was expected. However, the market didn’t like what Pat Gelsinger & Co. telegraphed and thrashed the stock after earnings. Intel communicated what it would cost on its quest to retake its process node leadership. However, it seems that investors weren’t sure about the company’s ambitious plans. Coupled with weakened profitability and free cash flow prospects, some value-oriented investors seemed to have headed for the exit.

Nvidia ( NVDA ) will issue its FQ3 report card on 17 November. The company had previously guided for a strong quarter. Jensen Huang & Co. see ” sequential growth driven largely by accelerating demand in data center.” The company also expects growth in each of its three markets, particularly in gaming. Investors’ expectations are also high given AMD’s robust performance. Hence, investors have eagerly anticipated NVDA’s earnings release as NVDA stock pushed through a new all-time high (ATH) this week.

We will discuss which semiconductor stock is the better buy now between them. INTC, NVDA, AMD Stock YTD Performance

INTC, NVDA, AMD stock YTD performance (as of 27 October 21). NVDA stock continues to enjoy a phenomenal year so far. The stock made a new ATH this week, as YTD returns surged to 87.3%. Bearish investors in NVDA can say all they want, but we have never adopted a bearish NVDA stock thesis. It just doesn’t make sense. The stock has the best possible A+ in Seeking Alpha’s momentum grade for the whole year. Hence, we really couldn’t understand those bearish theses. AMD stock is in second place with a 33.3% YTD gain. It seems like the stock has lagged far behind NVDA stock’s incredible performance. However, investors should consider the fact that AMD stock spent most of H1’21 in the red. Therefore, its huge momentum surge in H2’21 has been really impressive. Consequently, the stock’s momentum is also given an A grade in Seeking Alpha.

In contrast, the perennial underperformer INTC stock continues to underperform. The stock started very brightly as it raced to a 40% YTD gain. However, its momentum has completely fizzled out. Currently, its YTD decline of 3.9% looks abysmal when compared to AMD stock and NVDA stock. In addition, Seeking Alpha also assigned it with a D+ rating in momentum. Intel FQ3 Report Card Is Telling Of Its Weakening Leadership

There’s little doubt that AMD has made the most of its recent dominance over Intel. However, what’s more concerning to Intel investors, and likewise encouraging to AMD investors, is the clarity provided by their respective CEOs. Intel LTM revenue by segment. Data source: Company filings

Intel reported another underwhelming quarter, but we don’t think it was unexpected. Sure, the company’s data center business (DCG) continues to disappoint compared to NVDA and AMD. However, INTC investors shouldn’t be surprised.

DCG quarterly revenue YoY growth came in at 10% in FQ3. However, DCG revenue has been on a declining trend on a last-twelve-months (LTM) basis since FQ2’20. In a recent AMD article , we mentioned that Omdia estimated that AMD’s data center share crossed 15% in Q2’21 for the first time in history. In retrospect, Intel had almost complete dominance in this segment just four years ago. It clearly shows how the critical stumbles from its former management have derailed its previously “unassailable” leadership. Now, Gelsinger & Co. are left with the unenviable task of trying to overturn Intel’s sinking fortunes. With AMD having assumed the technological leadership at the expense of Intel, it certainly looks like an “easy […]

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