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Advanced Micro Devices (Nasdaq: AMD) reported its Q2 earnings on Tuesday. Rival to both Nvidia (Nasdaq: NVDA) and Intel (Nasdaq: INTC), AMD succeeded in beating earnings per share (EPS) estimate for the fourth consecutive quarter, at $0.47 vs $0.5 EPS reported.

AMD increased its year-over-year revenue by 9% to $5.8 billion while increasing its net income by 881%, from $27 million to $265 million. The company also improved its operating margin by 5 ppts YoY.

Year-to-date, however, Nvidia is still the undisputed semiconductor performer despite the recent pullback. While NVDA stock was up 138% during that period, AMD was up only 8%, with INTC as the worst performer at 35% negative.

But in the long run, which semiconductor stock is the best bet for investors taking exposure right now?

Gauging Nvidia, AMD, and Intel Valuations

Notwithstanding macroeconomic conditions and sentiment that affect the stock market but that are outside of the company’s control, three key gauges give investors an actionable insight:

• What is Nvidia, AMD, and Intel’s market positioning, i.e., their entrenchment in each sector (discrete and integrated GPUs, CPUs, software stack)?

• Do Nvidia, AMD, and Intel offer a development roadmap that would increase or decrease their market entrenchment?

• What is the basis of the companies’ perception at this moment in time?

With these factors in mind, how strongly are Nvidia, AMD, and Intel positioned?

Foundry or Fabless in GPU Rollouts

Out of the three, only Intel plans to establish itself as a global chip foundry, sandwiched between TSMC and Samsung, by 2030. This is important to note because it makes AMD and Nvidia reliant on TSMC’s capacity, which may be occupied by large companies such as Apple or Qualcomm.

Regardless of their roadmaps, AMD and Nvidia would rely on TSMC for actual rollouts at scale. With that in mind, how do market shares of Nvidia, AMD, and Intel compare now?

According to the latest Jon Peddie Research as of June, Nvidia fortified its discrete GPU market position, going from 84% from Q1 2023 to 88% in Q1 2024. Although Intel made some inroads with its Arc series a year ago with a 4% market share, the company failed to penetrate the discrete GPU market with effectively 0% unit add-in board (AIB) share in Q1 2024.

Over the period, AMD remained flat at 12% market share, with its 19% AIB share in Q4 ‘23 overtaken by Nvidia back to 12% in Q1 ‘24.

AIB shipments saw a 39% increase year-over-year, largely benefitting Nvidia.

AMD’s CPU Offering Steadily Encroaches Intel 

In contrast to Intel and AMD, Nvidia has a minimal CPU footprint. Its Arm-based CPUs for Windows PCs, codenamed Grace, are expected to show up sometime in 2025. In the meantime, AMD continues its CPU expansion. AMD supplies CPUs not only for Microsoft’s gaming consoles and Azure Virtual Machines but also for Microsoft’s latest lineup of Copilot Plus laptops.

Alongside Intel’s Lunar Lake, AMD’s Strix point will feature AI co-processing for the Windows 11 platform. As of Q1 2024 by Mercury Research, Intel holds 80.7% mobile CPU dominance against AMD’s 19.3%. However, Intel lost an 80.8% share in the desktop PC segment from Q1 2023 to 76.1%, elevating AMD to 23.9% in Q1.

This is unsurprising given the deluge of instability issues reported by buyers of Intel’s 13th and 14th generation of CPUs since late 2022. Most recently, Intel confirmed the issue as an unbalanced operating voltage, with no sign of mass recalls. Moreover, the affected CPUs are to be considered permanently degraded.

This will undoubtedly bolster the case for competitive AMD Ryzen processors in the next quarters as well. Lastly, although Intel is still dominant in the integrated graphics arena, this is tied to the perception of CPUs. Given that AMD’s integrated graphics solutions (APUs) are widely considered superior to Intel’s Iris Xe, AMD is expected to steadily lower Intel’s iGPU share as well.

Roadmap Rollouts

As it becomes more difficult to miniaturize computing power, we are seeing wider gaps between chip rollouts. The vast majority of current chips are based on 10nm and 7nm architecture. In other words, the greater the transistor density, the lower the power consumption with increased performance.

This is why much is expected of Intel’s 20A and 18A rollouts in 2025 and 2026, based on 2nm and 1.8 nm node processes, respectively. AMD’s next lineup of Zen 5 CPUs hitting the market in H2 2024 is based on TSMC’s N4X (4 nm) and N3E (3 nm ) architecture. AMD is also making big moves by acquiring Silo AI.

Likewise, Nvidia’s latest Blackwell architecture will feature TSMC’s 4NP (4 nm) manufacturing. This once again stands Intel out of the fabless crowd. Although AMD’s MI300X MI325X is expected to offer a superior cost-to-price benefit compared to Nvidia’s H100s, Nvidia’s GB200 Grace Blackwell Supership will likely be the go-to AI chip.

Moreover, Nvidia has a full-stack software solution accompanying its hardware, which made it rapidly climb the data center ladder. Nearly all early large language models (LLMs) have been trained with Nvidia’s frameworks, such as NeMo and other (Nvidia-optimized) open-source deep learning frameworks.

Final Verdict

At the moment, Intel’s blunder has benefited AMD. However, reputational damage can only last so long. What is more important from an investing standpoint is whether the stock bottomed out or is overvalued.

Intel’s forward price to earnings (P/E) ratio is 28.74, lower than Nvidia’s 39.53 and AMD’s 40.49. With the 10-for-1 stock split, Nvidia managed to keep up the momentum by lowering the psychological barrier to entry, now cheaper than AMD at $116 vs $144 per share respectively.

Although Intel received the CHIPS Act’s $8.5 billion grant (with $11 billion in loans) for its costly foundry development, negative sentiment, courtesy of Raptor Lake instability issues, offset this. 

At the end of the line, it appears that INTC stock bottomed out, making it the most compelling case for long-term exposure. According to Nasdaq’s forecasting data, here is how Intel, Nvidia and AMD match up:

• INTC – present price $30.6, average price target $40.21, bottom $29, ceiling $68
• NVDA – present price $115.9, average price target $142.74, bottom $90, ceiling $200
• AMD- present price $144.4, average price target $195.39, bottom $150, ceiling $250

Of the three, INTC is the only one aligned with the bottom, promising an average of 31% gains. NVDA would yield 23% within the same frame, while AMD would yield 35%.

However, in the long term, Intel is better positioned for growth against the fabless Nvidia and AMD. Barring further embarrassments and QC mishaps would make Intel the matchup winner for long-term gains. 

That said, Nvidia is still perceived as akin to Bitcoin (BTC) against thousands of cryptocurrencies, making for a streamlined investing thesis.

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