Advanced Micro Devices surged nearly 12% Tuesday as some analysts argued that the company is poised to benefit from weakness in its longtme rival Intel.
AMD’s stock closed Tuesday at $28.06 a share, its highest close since 2006. The chipmaker’s shares have risen more than 15 times over in the past three years as it shifted to meet the demands for high-powered graphics chips and other processors used in datacenters and data mining.
Much of that gain in AMD’s stock has come in the past five months. Since early April, AMD shares have risen 187%, not just on better-than-expected earnings – revenue grew by 53% in the most recent quarter – but on what Wall Street sees as problems at AMD’s longtime rival Intel.
Of all the storied rivalries in Silicon Valley, the one between Intel and AMD is one of the longest and most embattled. For decades, Intel was the silicon giant that executed perfectly, while AMD competed by trying harder. Whenever Intel stumbled, however, AMD has tended to find a way to add to its market share.
2018 has been tough year for Intel. Last month, the company shared details on a security vulnerability in its chips. That followed an admission that the release of its its 10-nanometer chips will be delayed because, in the words of former CEO Brian Krzanich, Intel “bit off a little too much in this case.” Krzanich resigned in June after violating Intel’s non-fraternization policies.
AMD, meanwhile, is working on a 7-nanometer chip it hopes to release next year – roughly the same time frame for Intel’s 10-nanometer chip. Mark Lipacis, an analyst at Jeffries, said that AMD may beat Intel to market with its own chip.
“For most of the past 12 years, Intel has executed near flawlessly, as AMD often stumbled and lost share,” Lipacis said in a note published on Tuesday. “However, over the past four years, AMD’s execution has been, in our view, near-flawless.”
Also on Tuesday, Cowen analyst Matthew Ramsay published a note on Tuesday saying the delay of Intel’s new chip “opens opportunities for AMD across the business.” Meanwhile, the supply of Intel’s 14-nanometer chips is falling short of demand, DigiTimes said.
All of which presents AMD with an opportunity for growth in the coming year or so.
