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AMD Investors Should Take This Into Consideration

By Neil Rozenbaum - Jun 16, 2021 at 10:00AM

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Can AMD hold on to its lead this time?

In this video, I will be covering AMD (AMD -1.93%) stock. The rise of the company since 2015 has been nothing but remarkable, mostly thanks to its CEO Lisa Su. AMD has seen its market value surge to more than $90 billion from about $2 billion since she took over, and recently it announced a $4 billion stock repurchase plan. But can things be too good to be true? Can AMD continue to grow? 

Advantage AMD

Intel's (INTC -1.13%) struggle is one factor behind AMD's success. Intel is still struggling with manufacturing after years of delays for its 10-nanometer chips. AMD uses TSMC (TSM -0.83%) to build its latest Ryzen and EPYC chips, giving it access to cutting-edge manufacturing processes. AMD provides chips for the latest PlayStation and Xbox game consoles as well as Tesla's (TSLA -0.84%) in-car gaming rig. Strong demand for those consoles has boosted AMD's results. AMD's revenue soared 93% in the first quarter, and net income more than tripled. 

Intel's comeback

Back in 2006, AMD reached 20% market share and that's as high as it got for the company. Back then it was Intel who was the one stealing AMD's lunch.

Will history repeat itself? Back in February, it was reported that Intel got some market share back for the first time in three years. AMD no longer manufactures its own chips, so the company doesn't have to pour cash into keeping up with Intel on the manufacturing side. But that would mean that AMD is entirely dependent on securing capacity at third-party foundries such as TSMC. Intel recently announced a $20 billion factory expansion in Arizona where it will be offering contract manufacturing jobs, and this will become a core part of the business.

Could AMD turn into Intel's client? Only time will tell but as of now, AMD's future looks bright -- but expect Intel to give it a run for its money. 

Watch the video below for the full insights.

*Stock prices used were the closing prices of June 14, 2021. The video was published on June 15, 2021.

Neil Rozenbaum has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NVIDIA and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
$98.27 (-1.93%) $-1.93
Taiwan Semiconductor Manufacturing Company Limited Stock Quote
Taiwan Semiconductor Manufacturing Company Limited
$89.20 (-0.83%) $0.75
Intel Corporation Stock Quote
Intel Corporation
$35.78 (-1.13%) $0.41
NVIDIA Corporation Stock Quote
NVIDIA Corporation
$183.35 (-2.88%) $-5.44
Tesla, Inc. Stock Quote
Tesla, Inc.
$911.99 (-0.84%) $-7.70

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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