What a week for Advanced Micro Devices
Unfortunately, management isn't talking. But Jim McGregor, a semiconductor analyst for industry researcher In-Stat, says to expect the worst. In a brief email response to my questioning, McGregor wrote that he expects the forthcoming price duel to put more pressure on AMD than on Intel. But, like me, he's also scratching his head. "At this point, [Intel's] price reductions seem to be questionable. Why reduce the price if you already had two disappointing quarters and are really struggling to justify your 2006 forecast to everyone who has seen it?" Exactly.
Foolish friend Rich Smith recently wrote that, in light of AMD's weakened position and a probable short-term drop in Intel's stock price, now may be a good time to get ready to load up on shares of the chip giant. I couldn't disagree more. Not that I favor AMD, either. I think you should turn your back on both stocks.
I know what you're thinking: The chip market is growing! Shouldn't I want a piece of the action? Yes, you should, so long as you're ready to commit to studying the nuances of the chip industry. But you needn't buy in to Intel or AMD to benefit from the expected gains. Consider Texas Instruments
Or how about my favorites, the Asian chip foundries? Taiwan Semiconductor
Intel and AMD may be close to the only game in town when it comes to computer chips. But there's a whole world of other devices that need electronic brains. In those markets -- where the greatest growth lies -- the big two are like idling wallflowers at the high school dance. Do your portfolio a favor, and leave them there.
Allow us to chip in with related Foolishness:
- I used to like Intel. Before the price war, that is.
- How will AMD pay for its fab investment in the midst of a price war?
- Maybe it's time you took a look at chip tester FormFactor. It's a Motley Fool Hidden Gems recommendation.
Intel is a Motley Fool Inside Value selection. Ask us for anall-access passto the service, and you'll be privy to chief advisor Philip Durell's best picks, which collectively are beating the market by nearly 3%. You'll also receive instructive lessons on valuation and company analysis. Give Inside Value a try; it's free for 30 days.