Fool Fight: AMD vs. Intel

Ali vs. Frazier. Tyson vs. Holyfield. Baer vs. Braddock. Balboa vs. Creed.

In the spirit of the great boxing matches of all time -- both real and fictional -- today we present the first Fool Fight, a digital brawl where the members of our Motley Fool CAPS beta community spar over two stocks.

No one actually gets hurt, of course. Instead, we'll be gauging bullish and bearish sentiment for each firm and using "pitches" -- brief investing theses revealed for all to see -- as the digital equivalent of punches. Like in boxing, the stock that lands the most blows wins the bout.

Tale of the tape
And now, today's combatants. In the red corner, it's Advanced Micro Devices (NYSE: AMD  ) . Once little more than a sparring partner for Motley Fool Inside Value selection Intel (Nasdaq: INTC  ) , AMD has ridden a remarkable resurgence in chips for servers to a spot in the rankings. Still, its acquisition of ATI Technologies (Nasdaq: ATYT  ) looks expensive and could cause problems if not managed well.

Meanwhile, in the blue corner, the Santa Clara Slugger has struggled. Currently in the midst of a multibillion-dollar restructuring plan, Intel yesterday previewed quad-core chips that could fuel a comeback. But it's also eerily reminiscent of the chipmaker's earlier foray into dual-core technology, which worked so well that its longtime partner Dell (Nasdaq: DELL  ) strayed to AMD.

Get ready to ruuuuummmmmmble!
Who will take the title? Ding! There's the bell! First out of the corner is AMD, with this jab from all-star CAPS player prose976:

AMD is a serious threat to [Intel]. It's smaller, but then again so was Wal-Mart (NYSE: WMT  ) . It has great products and great ambitions and is making tremendous inroads to get its chips into the next generation of digital "equipment."

Intel counters with a combination from fellow all-star gschuster:

x86 momentum is most easily measured by technology leadership and capacity. Intel has regained the lead with dual core technology. Add to that, Intel is making AMD choke on dual core chips. The added core increases die-size, reducing volume on capacity constrained AMD. Add the distraction of the ATI acquisition and things look up for Intel, down for AMD.

Ouch! AMD reels momentarily but then surprises its bigger rival with a left hook from new CAPS player richandnance:

The leadership of [former Intel CEO] Andy Grove is being felt in the lackadaisical way Intel is meeting the competition. New product development is slow; AMD now has a processor family that is superior to [Intel's], and large users (e.g., Dell) are making purchase agreements with AMD.

Stunned, Intel falls back to its corner as AMD presses the pace. Or is it the old rope-a-dope trick? CAPS leader Russell Carpenter, known here in Fooldom as TMFEldrehad, delivers the haymaker:

...As of this writing, [Intel's] trailing P/E is less than 17 while AMD's is nearly 25. Based on the history of confrontation here, and assuming that history repeats itself, and that AMD has not gained a permanent advantage (not hard to believe given [Intel's] resources), I do not believe that AMD's multiple should be roughly 1.5 times that of Intel. It would therefore follow that, given time, these multiples will inevitably converge-making Intel the better bet at present.

Let's go to the scorecard
And that's the final bell! It's a close bout, but, after reviewing the numbers and seeing a slight edge in bullish sentiment, our Foolish judges award the fight to ... Intel:

Metric

AMD

Intel

Total Ratings

287

684

Bullish Ratings

244

587

Bull Ratio

85.0%

85.8%

Bearish Ratings

43

97

Bear Ratio

15.0%

14.2%

Bullish Pitches

56

171

Bearish Pitches

18

21

Notes: Data current as of Sept. 27, 2006

Get in the ring!
Will the king of chip ka-ching justify today's marginal victory by completing its comeback, or has AMD crafted a permanent edge that will loom larger as time marches on? Get in the game now and tell us what you think. Or, if you'd rather, choose one of the more than 1,200 stocks that have yet to earn a star rating in the beta version of CAPS, including filtration systems maker Donaldson (NYSE: DCI  ) and insurer Brooke Corp. (Nasdaq: BXXX  ) . Click here to rate either of them now. It's entirely free. Your Fool cap is waiting.

Intel, Wal-Mart, and Dell are Motley Fool Inside Value selections. Ask us for an all-access pass to the service and you'll be privy to chief advisor Philip Durell's best picks, which collectively are beating the market by more than 5% as of this writing. You'll also receive instructive lessons on valuation and company analysis. Give Inside Value a try. It's free for 30 days.

Fool contributor Tim Beyers has 33 picks in his CAPS portfolio, including NVE Corp. (Nasdaq: NVEC  ) , which he believes is an excellent short candidate. Think he's wrong? Get in the game and add your own rating.Tim didn't own shares of any of the companies mentioned in this story at the time of publication. Get the skinny on all of Tim's stock holdings by checking his Fool profile. The Motley Fool's disclosure policy is always in fighting shape.


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