Semiconductor Showdown: Which Stock Will Rebound in 2025?
The semiconductor market has been abuzz with artificial intelligence (AI) driving growth, but two industry giants, Intel and Advanced Micro Devices (AMD), have struggled to keep pace. While both companies faced significant declines in 2024, with Intel’s shares plummeting 60% and AMD’s dropping 18%, they present intriguing turnaround opportunities for investors.
AMD’s AI Inference Niche
AMD has carved out a niche in AI inference, where its customers utilize its GPUs for narrow, well-defined use cases. Although it lags behind Nvidia in the GPU market, AMD’s data center revenue surged 122% year-over-year and 25% sequentially to $3.5 billion last quarter. The company’s Instinct GPUs and EPYC central processing units (CPUs) contributed to this growth.
Intel’s Struggles
Intel, on the other hand, saw its revenue decline 6% to $13.3 billion, with its adjusted EPS flipping to a loss of -$0.46. The company’s data center and AI segment showed a modest 9% revenue increase to $3.3 billion, but its largest segment, Client Computing, suffered a 7% revenue drop to $7.3 billion. Intel’s Foundry segment has been a significant drag on its results, reporting a $5.8 billion operating loss last quarter.
Valuation Comparison
From a valuation perspective, Intel appears cheaper, trading at a forward price-to-earnings ratio (P/E) of 12.6 times versus 17.6 times for AMD. However, when considering Intel’s core business and foundry business separately, its valuation becomes even more attractive. Intel’s foundry business, although losing money, has significant physical assets, and its stake in Mobileye adds further value.
Turnaround Candidates
Both Intel and AMD present compelling turnaround opportunities. AMD’s strength in AI inference and CPU markets, combined with its data center growth, make it an attractive rebound candidate. Intel, with its undervalued stock and hidden physical assets, offers deep value for investors. Ultimately, investors don’t have to choose between the two and can add both stocks to their portfolios.
Don’t Miss Out on the Next Big Opportunity
Our expert team of analysts has a proven track record of identifying companies poised for significant growth. On rare occasions, they issue a “Double Down” stock recommendation for companies about to experience a surge. Learn more about these incredible opportunities and how you can capitalize on them before it’s too late.
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