Summary

• AMD fell to new 52-week lows as competitor Intel keeps drumming up sector weakness, which is not as impacting to AMD.
• The chip company highlighted strong company dynamics at an Analyst Day only 3 weeks ago.
• Even with a 20% cut to 2023 EPS estimates, the stock only trades at 17.0x these estimates while AMD trades at 13.5x unadjusted targets.

Image Source: Pixabay

Advanced Micro Devices (NASDAQ:AMD) has crashed to new 52-week lows despite a great Analyst Day only a few weeks back. CEO Lisa Su continues to confirm the business isn't impacted by the low-end PC market where competitor Intel (INTC) continues to run into demand issues. My investment thesis remains ultra-Bullish on any stock collapsing while maintaining strong prospects for long-term growth far in excess of where the price currently trades.

Intel Problems

Semiconductor companies from AMD to Qualcomm (QCOM) to NXP Semi. (NXPI) have made the case for strong demand and nearly insatiable demand in the data center, premium PC and automotive sector, yet the stocks are hitting new lows due to weak low-end PC and smartphone demand. Oddly, Intel is the company continuously discussing weakness and apparently slashing chip prices, yet the stock is holding up better.

Semiconductor media sites are reporting that Intel cut Alder Lake chip prices by up to 10% due to weakness in gaming CPUs. The original DigiTimes report suggests the potential for another mid-single-digit price cut in Q3 as well.

Previously, Intel had issued a memo to employees regarding a hiring freeze in the client computing group for at least two weeks. At the same time, Intel CFO David Zinsner discussed weak chip demand at the Bank of America Conference.

In addition, the company has announced the potential pause on building new fabs in Ohio due to the lack of government funds with the CHIPS Act still paused in Congress. CEO Pat Rogers discussed the fabs costing $10 billion each, but the act will cap subsidies at $3 billion per fab which requires Intel to still fund the majority of the costs. The company can't build up the foundry business without building these new fabs to increase supply. All of this brings us back to the point that AMD isn't facing any of these issues. 

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