Starting around 2017 with the launch of its Zen architecture, Advanced Micro Devices (AMD -2.83%) has been staging an epic comeback. The seeds were planted way back in 2009 when the semiconductor company spun off its manufacturing operations and transformed itself into a chip designer. By getting out of the capital-intensive business of making chips, AMD could focus its energy on design.

That focus has paid off, with AMD winning share in both the PC CPU and server CPU markets over the past few years. AMD's progress in winning over data center and cloud customers with its powerful server chips is particularly impressive, given that rival Intel (INTC -2.12%) had a near-monopoly not long ago.

Winning in the data center

In the world of server CPUs, the total cost of ownership is critical. The sticker price of a server CPU is only a small part of the total cost. The cost of actually running the chip, feeding it the power it needs to churn through workloads, adds up over the chip's lifespan. Customers don't just want the most powerful chip; they want the most efficient chip as well, and one with high core counts to minimize the number of servers required.

It took a few generations of its EPYC server CPUs to reach this point, but AMD now wins on both performance and efficiency. The company's fourth-generation EPYC Genoa chips simply blow Intel out of the water. Tom's Hardware  called Genoa a "server slam dunk" in its review. AMD leverages Taiwan Semiconductor's 5nm manufacturing process, giving it a manufacturing edge over Intel's latest Sapphire Rapids server CPUs.

AMD's Genoa beats Intel on core counts, which means customers can pack the same number of cores into fewer systems and thus lower overall costs. Those high core counts mean that Genoa has an enormous advantage over Intel's latest chips in multi-threaded workloads. Genoa also comes out on top in single-threaded workloads, a testament to how badly Intel has fallen behind.

Intel's chronic delays in the past certainly helped AMD get to this point. Intel's latest Sapphire Rapids chips, which finally came to market at the beginning of 2023, were originally slated for a 2021 release. Intel's issues with its 10nm manufacturing process, on which Sapphire Rapids is built, were part of the problem. Sapphire Rapids does bring innovations like built-in accelerators for AI and other specialized workloads, but it can't compete on core count or raw power.

AMD has also rolled out Genoa processors with even higher core counts that use its lower-power Zen 4c cores. These chips are built for cloud computing workloads where raw single-threaded performance is less important. These cloud-first chips come with as many as 128 cores, allowing for unprecedented core density. Intel won't have an answer until it launches Sierra Forest sometime in mid-2024.

If there's one reason to buy AMD stock, it's the company's advantage in the server CPU market.

But don't count Intel out

While AMD is sitting pretty in the server CPU market right now, Intel is working on a comeback of its own. Unlike AMD, Intel has doubled down on manufacturing. The company is on track to launch five process nodes in a four-year span, culminating with the Intel 18A process in late 2024 that may regain Intel a manufacturing edge over TSMC. These new processes will benefit Intel's own products as well as drive its fledgling foundry business forward.

Intel will begin its comeback in the server CPU market next year with two new families of chips. Granite Rapids, meant to rival AMD's most powerful chips, will jump to the Intel 3 process and boost the core count compared to Sapphire Rapids. Launching at roughly the same time will be Sierra Forest, Intel's efficiency-minded chip with as many as 144 low-power cores.

Intel is far enough behind that these new products may not leapfrog AMD, although they should at least close the gap considerably. It may take until 2025 when Intel's manufacturing operations are back on top, assuming all goes according to plan, for the company to put AMD on notice. We don't know much about Intel's plans after Granite Rapids, but the next-gen chip will probably move to either the Intel 20A or Intel 18A process.

Of course, AMD won't be sitting still. The company's fifth-generation Turin EPYC server CPUs are expected by the end of 2024, and they'll likely move to a 4nm or 3nm process from Taiwan Semiconductor. But AMD's manufacturing edge over Intel could slip away by then as Intel pushes hard on manufacturing.

In the PC CPU market, Intel has already staged a comeback despite being behind AMD in manufacturing. Intel's Raptor Lake chips generally beat AMD's latest Ryzen chips in performance. With Intel no longer bogged down by manufacturing delays, the company will be a force to be reckoned with over the next few years.

While AMD has the advantage in the lucrative server CPU market right now, one reason to avoid the stock is Intel's manufacturing-driven resurgence.