Semiconductor stocks have delivered some stellar performances in 2025, as is evident from the 40% gains registered by the PHLX Semiconductor Sector index this year. Though the sector has witnessed periods of volatility due to concerns such as the sustainability of the massive spending on artificial intelligence (AI) infrastructure and questions about the returns on investment that this technology will actually deliver, strong chip demand has provided a solid tailwind so far.
The good news is that semiconductor stocks can keep doing well in 2026. The World Semiconductor Trade Statistics organization forecasts a 26% spike in semiconductor sales next year to $975 billion, higher than this year's projected growth of 22.5%. This should bode well for Advanced Micro Devices (AMD +3.36%) and Intel (INTC +4.85%), two chip companies that have clocked impressive returns in 2025.
But if you're choosing one of these two stocks to buy now based on their outlook for 2026, which one should it be?
Image source: Intel.
The case for AMD
As of this writing, AMD stock is up 72% in 2025. Its revenue and earnings have been growing at a healthy clip thanks to demand for its chips for use in personal computers (PCs), gaming consoles, and data centers.
NASDAQ: AMD
Key Data Points
Its revenue in the first three quarters of 2025 increased by 35% from the year-ago period. AMD's generally accepted accounting principles (GAAP) net income jumped by about 244% during this period to $2.8 billion. The new year could be even stronger for AMD. The proliferation of AI in PCs and data centers, along with a potential increase in the company's market share in AI chips, is likely to drive growth in 2026.
AMD has been constantly gaining market share for central processing units (CPUs) in both PCs and data centers. Its share of PC CPUs increased by 1.4 percentage points year over year in the third quarter of 2025 to 25.4%, according to Mercury Research. Meanwhile, it recorded a jump of 3.6 points in server CPUs to 27.8%.
AMD can continue to gain share in CPUs next year since it is moving to a 2-nanometer (nm) process node from the current-generation 3nm and 4nm nodes. The company claims that its Zen 6 CPU will be the first chip fabricated on foundry leader TSMC's 2nm node. Importantly, that smaller process node should enable AMD to deliver increased computing performance while keeping power consumption in check.
The company also notes that its 2nm chips will support a wider range of AI workloads in both PCs and data centers. Moreover, AMD sees its addressable opportunity in the data center market increasing at an annualized rate of over 40% for the next five years. On the other hand, shipments of AI PCs are projected to jump by 83% in 2026.
AMD's expanding addressable market and its ability to acquire a greater share of the data center and PC chip markets explain why it expects annualized revenue growth of more than 35% for the next three to five years, up from the 21% annual growth it has recorded in the past five years. It also expects its operating margin to grow to 35% over the long run from around 24% this year.
2026 will be the year when AMD steps on the gas. Analysts are estimating a 62% spike in earnings next year, up significantly from the 20% non-GAAP earnings growth it is set to deliver in 2025. Ideally, that should translate into more gains for AMD stock next year.
The case for Intel
Intel has regained investor confidence in 2025 thanks to a few key positive developments, which explains the 87% spike in its share price this year.
NASDAQ: INTC
Key Data Points
Investments from the U.S. government, SoftBank, and Nvidia have strengthened its balance sheet. The company also divested its stake in programmable chip manufacturer Altera and sold a stake in Mobileye. As a result, Intel was sitting on almost $31 billion in cash and short-term investments at the end of the third quarter. The $5 billion investment from Nvidia is set to close in the current quarter.
This solid cash position should enable Intel to bring more production capacity online for its most advanced chip nodes, which are experiencing healthy demand. CFO David Zinsner remarked on the October earnings conference call that the demand for its Intel 10 and Intel 7 process nodes exceeded supply, driven by the PC and data center markets.
Management also notes that its data center customers are interested in entering into long-term supply agreements to support the installation of additional AI infrastructure. At the same time, Intel's partnership with Nvidia for the joint development of data center chips and PC processors that will be deployed in the hyperscaler, enterprise, and consumer end markets should open up another opportunity for the company to accelerate its growth.
Intel has been lacking on that front so far. The consensus estimate is for a 1% drop in revenue this year. However, the cost-cutting measures Intel has undertaken will help it post an adjusted profit of $0.34 per share in 2025, according to analysts, compared to its loss of $0.13 per share last year.
Intel's cost-saving efforts are set to continue in 2026. Management expects to lower its operating expenses to $16 billion from this year's $16.8 billion, and its revenue is expected to grow by 2.5% in 2026. This combination of an improvement in its top line and control of spending could boost Intel's earnings by an impressive 76% next year, per consensus estimates.
This all looks like good news for Intel investors, but is it a better buy than AMD?
The verdict
Both Intel and AMD are on track to clock healthy earnings growth next year. However, for Intel, that growth is expected to mainly be driven by its cost-optimization efforts -- its top-line growth has yet to kick into a higher gear. AMD, meanwhile, is clocking healthy growth in both revenue and earnings, and it expects to step on the gas next year.
What's more, AMD is significantly cheaper than Intel on the valuation front.
AMD PE Ratio (Forward) data by YCharts.
Based on all that, AMD appears to be the more convincing stock to buy now. Intel, of course, could do well next year if it continues to execute its turnaround, but AMD seems like the better bet for 2026.
