Intel vs. Advanced Micro: Which Chipmaker is the Better Buy Now?

A Zacks analysis compares Intel (INTC) and Advanced Micro Devices (AMD), both vying for dominance in the CPU and AI chip markets. While both companies' EPS estimates for 2025 have trended downward recently, AMD is projected to grow sales by 23.3% compared to Intel's expected 4.3% decline; AMD is also expected to have stronger long-term earnings growth (24.5% vs 10.5%). Despite Intel's lower price/sales ratio (1.74 vs 5.48), the report suggests AMD is currently the better investment option due to its growth trajectory, particularly in the AI space with its MI300 series accelerator.

Analysis

Intel Corporation (INTC) and Advanced Micro Devices (AMD) are prominent semiconductor firms intensely competing in the CPU market, with both strategically pivoting towards AI and advanced chip technologies. Intel is pursuing its IDM 2.0 strategy, bolstered by $7.86 billion in U.S. CHIPS Act funding and its new Xeon 6 processors targeting AI workloads; however, it faces significant headwinds including a projected 4.3% year-over-year decline in 2025 sales, geopolitical risks related to its China revenue, and a recognized lag behind competitors like NVIDIA and AMD in the GPU and broader AI segments. Conversely, AMD is strengthening its AI market position with its MI300 accelerator family and benefits from its Xilinx acquisition and 7nm chip production via TSMC, projecting a 23.3% year-over-year sales growth for 2025. Despite AMD's stronger growth outlook (24.5% long-term earnings growth expectation versus Intel's 10.5%), both companies have seen their 2025 EPS estimates trend downward and their stock prices decline significantly over the past year (INTC -33.8%, AMD -33.2%), underperforming the industry's 14.1% growth. Intel presents a more attractive valuation with a price/sales ratio of 1.74 compared to AMD's 5.48, but AMD's superior growth trajectory and recent momentum in AI position it more favorably according to the Zacks analysis.

Key Decisions for Investors

• Investors should weigh AMD's projected 23.3% sales growth in 2025 and higher long-term earnings growth expectation of 24.5% against its premium valuation (P/S 5.48), particularly for growth-focused portfolios.
• For Intel, consider the lower valuation (P/S 1.74) and substantial CHIPS Act funding, but remain cautious due to its projected 2025 revenue decline of 4.3%, significant exposure to China, and competitive lag in the critical AI and GPU markets.
• Monitor both companies' execution on their AI strategies and competitive responses to NVIDIA, given that 2025 EPS estimates for both INTC and AMD have trended downwards and both stocks have markedly underperformed the broader semiconductor industry in the past year.
• Note the Zacks Rank #3 (Hold) for both stocks, suggesting a need to evaluate individual risk tolerance and investment horizons before initiating or adjusting positions, potentially awaiting clearer signs of strategic execution or market shifts.