you...
You'll have to make the decision for yourself, but in order to pick AMD as an investment today, you are betting that they will outgrow Intel; else, their share price is already too high. Intel doesn't have to regain lost share to be a better investment. If they grow at the rate they've been growing, their share price is already too low.
Me...
Your right, AMD will have to continue outgrowing INTC to continue appreciating at the present rate, but that is pretty much a forgone conclusion given the head of steam INTC has so graciously provided AMD. The only question is how much that growth will be now that the capacity shackles have been taken off.
Basing ones estimates on what analysts have predicted lately hasn't proven to be a good indicator of what has actually happened. These guys, like the INTC bees, are sort of staring into AMD's headlights, dumbfounded at what is happening and unable to comprehend the change of events.
I've said it before; earnings are not a very good indicator of a company's health at turning points, either on the way up or down. That's because companies on the way up tend to understate earnings while companies on the way down tend to overstate. Just another thing that should be apparent by the end of 06.
INTC is still a bloated pig, in fact it seems to have been putting on more weight lately in an attempt to eat its' way out of its' problems. What you should be thinking about is what's going to happen to INTC earnings next year when AMD has the capacity, the products and the will to take 1.5 to 2% market share a Q?
Just having parity with AMD products won't be enough to stem the tide; even superior products probably won't be enough in the short term. It's taken INTC a long time to get into this mess and there is no proof yet that the mess is getting any better. For companies, like INTC, that have been so very successful, the attitude is usually why change things that aren't broken. The problem is that things are broken, it's just that INTC management doesn't realize it yet, or doesn't want to admit it. So far the approach has been to do what has worked in the past, namely, throw resources at the problem. What's going to happen this time when earnings start to drop and fab utilization plummets as AMD starts taking big chunks of market share? There are lots of tough decisions in INTC's relatively near future.
AI
