Intel Stock: Is It Better to Sell Now Than To Regret in The Future?

Intel has been a market leader in the semiconductor industry. But the company is under threat from AMD, which is quickly rising and gaining a sizable market share, resulting in growth concerns for Intel stock. In April, Intel stock took a huge beating after it cut 2019 revenue guidance by $2.5 billion, citing slower market trends, NAND market slowness and declining demand in China.

Intel’s AMD Problem

AMD’s recently launched Ryzen line is trending due to its high performance and affordable cost. AMD, which started off as a low-end market player, is now targeting the higher ends of the market. AMD is getting ready to crush Intel with its upcoming 7nm CPUs. In the data center market, Intel is facing tough competition from NVidia and AMD. Analysts believe AMD’s 7nm EPYC Rome data center processors offer unparalleled performance, and easily beat Intel’s Xeon lineup.

Intel’s dilemma is that it has gone into a reactionary mode. It waits and sees AMD’s strategy and products before making its move. Intel doesn’t want to slash prices, but sooner or later it will have to, amid rising competition.

Structural Challenges

Intel stock recently rallied after the company posted better-than-expected quarterly results. But Chris Caso, an analyst at Raymond James, said in a program on CNBC that the rally was unwarranted because Intel is facing structural challenges. The analyst also said in the next two years the chips industry will experience “cyclical depression” due to supply and demand issues.

Intel is operating in a tricky industry. Amid trade war between the U.S. and China, Intel and other chip companies are facing the worst uncertainty. President of chips industry association SEMI China, Lung Chu, said in an interview to CNBC that Intel and other companies will take a hit if the current trade war drags on.

Despite the changing trends, it’s important to note that Intel’s size is huge, and its market footprint is extremely strong. In the Cloud server market, Intel practically has over 90% share. The company is also offering products for futuristic markets like AI, driverless cars and machine learning. It will take a lot of time for AMD to catch up. But AMD’s stock price reacts positively to the news of it’s market share rise, while Intel always takes a hit. Therefore, it’s a safe bet to buy AMD stock and sell Intel.

Free books, reports and subscriptions...