Big global events are a part of the markets. The stock market has fallen, the currency rates are fluctuating, and inflation is rising. Dividend stocks are highly attractive because of their ability to produce significant returns over long periods. However, for those investors who can stomach a bit of risk, the tech sector looks like a gold mine. Advanced Micro Devices (AMD) is one to take advantage of among the bargains in established tech names. As a result of decades of hard work and dedication, AMD’s ability to produce quality results has only increased.
AMD is a designer, manufacturer, and promoter of microprocessors that focuses on supplying clients with the latest technology.
Advanced Micro Devices is primarily known for its graphics processing units (GPUs) in gaming consoles, personal computers, workstations, servers, and embedded systems. The company also produces central processing units (CPUs), programmable chipsets, discrete GPUs, and semi-custom designs.
AMD’s most popular products are its Ryzen line of desktop processors and Radeon graphics cards. AMD is one of the biggest semiconductor companies in the world.
In addition, the company has been competing with Intel (INTC) in the market for decades now. It has been gaining ground on Intel for several years now, and the latest quarter proved as much.
AMD made major IT headlines in the first quarter of 2022, as it took away significant market share from Intel. It is a major headache for Intel bulls because the company was finally generating some momentum versus AMD after several quarters of losses. However, the latest quarter confirms that AMD is still in the driver seat in this space.
AMD Versus Intel
The competition between Intel and AMD has been going on for decades. Despite being a larger company, it has fallen behind recently. The prediction is that Intel will continue to lead the semiconductor industry because of its competitive advantage over AMD. However, AMD is gaining ground fast, and for those investors looking towards the future, few companies look in better shape than AMD, looking forward.
Since Lisa Su took over as CEO of AMD in 2014, the company’s stock has soared and returned 30-fold gains. Meanwhile, Intel has had an abysmal record. Under Su’s leadership, AMD shifted its focus to high-performance computing and caught up to competitors like Nvidia.
AMD’s computer segment was a fairly small contributor to its revenue in the past, but has been growing substantially in recent years. Its enterprise, embedded, and semi-custom segment makes up for this and are the driving force for AMD’s growth. Its computing and graphics segment consists of its Ryzen CPUs & Radeon GPUs, which are important contributors to AMD. AMD’s chips are also growing in demand as data centers expand. This will cause its returns to increase as well.
AMD saw tremendous growth in Q1, with a year-over-year revenue increase of 71%.
It includes over $5.9 billion and impressive market share increases across segments. Non-GAAP net income rose 148% over the year-ago period, due to a sharp decline in new expenses and higher revenue growth. This year, the company is forecasting aggregate revenue growth of over $26 billion.
Intel Is Becoming a Dividend Stock
Intel is an American multinational corporation and technology company founded in 1968. It is the world’s second-largest and most valuable semiconductor chip maker by revenue.
Intel has been a pioneer in developing microprocessors, including x86, Itanium, and Core processors. The company has also produced one of the world’s first commercial microprocessors, the 4004.
Problems have been ongoing for a while now at Intel as it has lost its technological edge. Its leadership turmoil has also been quite deep. Though things are not so encouraging in an industry that keeps evolving by the day, Intel is not adapting very well to these changes. Due to several of these setbacks, the company has had to turn elsewhere and has started allocating its resources.
Intel’s revenue for Q1 came in at $18.4 billion. While Intel is still the second-biggest chipmaker globally, its revenue has dropped 7% from last year. The company reported a non-GAAP income of $3.6 billion. This figure was down by 35% year-over-year compared to earnings a year ago, and the company’s profits fell because of higher costs.
It’s no surprise to see the stock price fall significantly over the last year. The revenue forecasts for Intel’s 2022 fiscal year only predict ~1% growth. Since the rates will not change soon, there is no real hope of a turnaround on the horizon.
In such an environment, Intel mainly holds value as a dividend stock. Intel’s shareholders have had continuous access to their dividends since it started making payments in 1992. Despite several economic crises and tough situations such as the brief pandemic-induced recession, the company has consistently met its expenses.
Wall Street’s Take
AMD continues to hold all the cards in terms of Wall Street opinion. The stock has a Moderate Buy consensus rating based on 13 Buys and nine Holds. The average AMD price target is $134.47, which implies 47.51% upside potential from early Thursday trading levels.
My Bottom Line on AMD Stock
AMD is currently the better buy by most investor standards. It is more expensive than Intel but is growing faster and will continue to do so.
AMD is a very successful business; it has been around for over 40 years and has grown to become one of the most influential companies in the tech industry.
The company does not only make processors but also graphics cards and other related products. It is currently ranked as the second-largest chipmaker in the world. The chip maker’s underlying fundamentals are solid, and they show no signs of degrading. This company could be a good bet because it has dropped in value recently – keep an eye on it.
Read full Disclosure
