Better Buy: Advanced Micro Devices vs Intel

The battle between Advanced advanced tools (NASDAQ: AMD) and Intel (NASDAQ: INTC) has grown tremendously in recent years. After spending decades behind the power loop, AMD took a technical lead as Intel’s progress was short-lived.

However, just because Intel has fallen behind does not mean it is out of the game. Intel is still generating more revenue than its competitors. It is also an ongoing force in the industry as it maintains such missions Dell, Lenovo, and HP.

Now, investors need to decide whether the emerging growth name or the longtime tech giant can upload higher investment returns. We will take a look at the two chip stocks to see what would be best for investors.

State of both companies

The relationship between AMD and Intel is explained by a dramatic career change. AMD was a long way behind Intel in the PC market and was left to die after PCs declined.

However, under CEO Lisa Su, he has come back a great deal. He has been a strong competitor to NVIDIA in the GPU market. Among the most famous winners he is becoming a chipmaker for Microsoftthe new Xbox and the Sony PlayStation 5.

Robotic arm gripping CPU chip.

Image source: Getty Images.

However, its most impressive impact comes in its technical direction over Intel. AMD is now marketing 7nm chips, while Intel will not release a 7nm chip until 2022 at the earliest. In addition, the company that may be able to produce their own cracks needs to be more reliant Semiconductor Taiwanit is good to meet product goals. CEO Bob Swan said he is also considering buying out to produce 7nm chips.

Despite these disappointments, Intel has tried to redefine today’s technology market. Its non-PC business lines include data centers, internet of things, and autonomous cars. It has also embedded its technology in emerging 5G networks. Time will tell whether some of these technologies can stimulate a resurgence in Intel stock.

How the finances compare

For now, Intel ‘s recovery is not within sight. AMD stock has risen about 110% this year. In comparison, Intel ‘s stock has been very bearish, as it is down around 15% for 2020.

AMD chart

AMD data by YCharts

As most would expect, this has made AMD more expensive. AMD’s price-to-earnings (P / E) ratio is now around 54.

Nonetheless, AMD’s non-GAAP earnings came in at $ 0.41 per share in the most recent quarter. This is a 128% increase from a year ago. On the other hand, Intel’s non-GAAP profit of $ 1.11 per share was down 22% over the same period.

However, Intel is in better shape financially than some would assume. For one, it’s still a much bigger company. Its $ 18.3 billion in quarterly revenue is 6.5 times the $ 2.8 billion raised by AMD. Moreover, Intel’s cash flows remain strong. In the first nine months of the year, Intel generated approximately $ 15.1 billion in free cash flow.

This will allow the company to pay a gradually rising share of $ 1.32 per share, yielding around 2.6% at current prices. The payment cost the company $ 4.2 billion over the nine months, leaving enough money to buy back shares or invest in the company.

AMD has not been as strong in this regard. Over the same nine-month timeframe, it reported a free cash flow of $ 297 million. This comes after a negative cash flow was reported in the same period last year.

AMD or Intel?

However, for all Intel features, AMD is more likely to offer faster growth rates to investors.

Of course, AMD investors have to pay a base price. However, this is the only company that is generating significant growth. Moreover, its technical leadership means that AMD will remain a force in the semiconductor industry in the future.

Intel can maintain the customer base and cash flows to remain a force in the industry. Nonetheless, AMD’s rising fortunes should offer stronger results.