Intel Corp (INTC)

[sgolds]

Better investment - INTC or AMD?

Now, we can all agree that INTC was the premier investment of the 1980s and 1990s. They invented succeeding versions of x86 processors, and AMD was a mere clone company.

In 1999, AMD released the Athlon - their big plunge into designing a whole architecture without Intel's help. I made a strategic decision then to purchase AMD because they were moving out of Intel's developement shadow. How does my first purchase of AMD at a split-adjusted 9 compare? Let's look at the 4-year charts for both companies, first Intel:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=intc&sid=0&o_symb=intc&f...

We see the price has gone from about 45 to a current 28. That is a 38% drop. Now for AMD's chart:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=amd&sid=0&o_symb=amd&fre...

Looks like 11 at the start of the chart, vs. 12 today. A 9% gain! Now, my first purchase was luckier, it happened in that subsequent dip to 9 so I saw a 33% gain on those. (However, I've had other purchases since which did not fare as well, overall I'm about even on AMD stock.)

So, overall, AMD has been a better investment than Intel over the long period since AMD took their destiny into their own hands by introducing their own processor and socket technology.

Not quite as well as I had hoped, though! AMD has succeeded in wounding Intel - just look at the prices of processors today. For almost 20 years, the top desktop processor was released at a price point of $1000. Those days are gone for Intel forever! However, AMD has not translated that into success for themselves. It is a pyrric victory since, as I said, I haven't done better than break even on my AMD holdings, even as Intel shareholders have suffered.

I'd rather both stocks increase, just more for my AMD shares. :)

Going foward, I expect AMD to continue to be a better investment than Intel. Intel has managed better for profitability, and they have a load of cash (not as much as they used to, but still very respectible). However, Intel is losing their cash cow by refusing to extend x86 to 64-bits. IMHO, the Itanium strategy will not prevail in the industry, it is only a question of whether - and how long - before Intel launches its own x86-64.

So I stay long AMD.

I hope this post is received in the spirit of intelligent give & take that it is intended!