AI's Future: Intel or AMD - Who Will Lead?

Published Date: 05/07/2024

As artificial intelligence (AI) services continue to rise in demand, chipmakers Intel and AMD are vying for a piece of the lucrative market.

Increased demand for artificial intelligence (AI) services created steep competition among tech companies, particularly in the chip market. Hardware like graphics processing units (GPUs) are crucial to training AI models, creating a lucrative opportunity for the companies developing these chips.

Nvidia took the lead in AI GPUs, which led its stock price and earnings to skyrocket over the last year. However, eyes have also been on chipmakers Intel and Advanced Micro Devices, which launched competing chips and could offer significant gains as the industry expands.

Intel launched new AI accelerators this year and is expanding its manufacturing division with hopes of becoming a leading AI chip fabricator. Meanwhile, AMD's second-largest market share in GPUs could grant it a lucrative role with AI in the long term, allowing it to fill in the supply gaps that Nvidia might not be able to meet.

Both companies are at earlier stages of their AI journeys than Nvidia, but that could mean they have more room to run in the coming years. So let's compare these chipmakers and determine whether Intel or AMD is the better AI stock right now.

Intel  

Intel is seeking a bigger role in AI by launching its Gaudi 2 and Gaudi 3 accelerators, which are capable of running AI workloads for data centers. Intel is setting itself apart from rivals like AMD and Nvidia by offering competitive pricing, with its chips costing roughly a third of the price of similar products on the market.

The most promising development is Intel's big bet on becoming a leading player in the foundry market. According to Allied Research, the semiconductor foundry market was worth about $107 billion in 2022 and is expanding at a rate that will see it more than double to $232 billion by 2032.

Advanced Micro Devices  

AMD has become a company to watch over the last year, as it restructured its business to prioritize AI. The company made promising headway in the industry, launching its own AI GPUs and signing clients like Microsoft and Meta Platforms.

However, AMD still has a lot of work ahead to rally investors with financial growth. Despite an expanding position in AI, AMD suffered more than 40% in declines in its client and gaming segments in the first quarter of 2024.

Is Intel or AMD the better AI stock this July?  

Intel and AMD have taken different approaches to AI. Intel is trying to differentiate itself in the industry by offering a wide range of chips and investing heavily in manufacturing. Meanwhile, AMD aims to become an equal to Nvidia.

However, Nvidia's estimated 90% market share in AI GPUs will likely be challenging to overcome, suggesting Intel might have a better time expanding in the industry than AMD.

Intel is a multinational corporation that designs, manufactures, and sells computer hardware components. Advanced Micro Devices (AMD) is a multinational semiconductor company that develops computer processors and related technologies.

FAQs:

Q: What is the main difference between Intel and AMD's approach to AI?

A: Intel is trying to differentiate itself in the industry by offering a wide range of chips and investing heavily in manufacturing, while AMD aims to become an equal to Nvidia.

Q: What is the estimated market share of Nvidia in AI GPUs?

A: Nvidia's estimated 90% market share in AI GPUs.

Q: What is the projected growth of the semiconductor foundry market?

A: The semiconductor foundry market is expected to more than double from $107 billion in 2022 to $232 billion by 2032.

Q: What is Intel's strategy to become a leading player in the foundry market?

A: Intel is expanding its manufacturing division and opening chip fabs throughout the U.S. to become the country's primary chipmaker.

Q: Which company has a better valuation according to price-to-earnings and price-to-sales ratios?

A: According to the data, Intel is potentially trading at a bargain compared to AMD.

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