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This seems to be heavily driven by the difference in their PE ratios. Intel's PE ratio is ~10, and AMD's is ~40. For context, AMD's quarterly revenue is ~5B an

by whack 5y ago

This seems to be heavily driven by the difference in their PE ratios. Intel's PE ratio is ~10, and AMD's is ~40. For context, AMD's quarterly revenue is ~5B and Intel's is ~$20B. AMD's quarterly net income is ~$1B and Intel's is ~$4.5B. I'm surprised that AMD is valued higher, despite their revenue and profits being so much smaller. The financial markets are in essence betting that AMD will be able to achieve revenue/profit parity with Intel, despite the huge lead Intel currently has. It will be very interesting to see if that comes to pass. I remember the days when AMD seemed to be on the verge of bankruptcy, and there was talk of Intel simply buying AMD since it was so cheap. Presumably that didn't happen because Intel feared anti-trust laws if it purchased its main/only competitor. Kudos to AMD for the turnaround - this competition is sure to be benefit the wider industry.

omegalulw 5y ago
Financial markets almost always tend to price future growth in, it's not really a surprise.
cinntaile 5y ago
People keep forgetting that AMD is fabless, while Intel is not. You can't just compare their numbers without taking this important difference into consideration.
- whack 5y ago
  Stock valuations are driven primarily by present and future profits. Given that their profits are primarily coming from extremely similar markets, you absolutely can and should compare their numbers, especially their earnings.
  - cinntaile 5y ago
    I don't see how this disagrees with what I said. If you have huge capital expenses because you have your own fabs this will have implications for your future profit potential.
  - lobocinza 5y ago
    And also by stories like the GPU shortage.
- colinmhayes 5y ago
  I really don't buy being fabless as an advantage for amd. It just means they're at the mercy of TSMC and maybe samsung. Especially with apple and it looks like Intel getting into the fabless design game it really just seems like the fabs will be able to squeeze all the profit out.
  - NonEUCitizen 5y ago
    You don't have to "buy." Fabless as an advantage for AMD is not a story, it is actual history. AMD used to run its own fab and nearly went bankrupt doing so. It spun off the fab as Global Foundries, and still couldn't catch up due to contractual obligations to use GF which was behind Intel. By eventually switching to TSMC (with new/renegotiated GF contracts; GF still makes glue chips on chiplets and also got some AMD stock), AMD beat Intel with more advanced process (it was already competitive in architecture). Intel is now the one that's disadvantaged by using less than state-of-the-art fabs, the position AMD was in until about 5-7 years ago. Not only is Intel disadvantaged, it's doubling down on fabs, imagining that it will somehow overtake TSMC in the future.
    - colinmhayes 5y ago
      Sure, and definitely made the right love spinning gf off, and it absolutely was instrumental in catching up with intel. But I’m not convinced that it’s an advantage over intel in the long run. TSMC will co to use raising prices as apple, intel, and nvidia all bid up the price of leading edge nodes. AMDs margins will always be worse than intels because of that. Intel doesn’t have to overtake tsmc, it just needs to be close enough to make reasonably competitive chips, which it’s already doing.

by whack 5y ago

omegalulw 5y ago

Financial markets almost always tend to price future growth in, it's not really a surprise.

cinntaile 5y ago

People keep forgetting that AMD is fabless, while Intel is not. You can't just compare their numbers without taking this important difference into consideration.

whack 5y ago
Stock valuations are driven primarily by present and future profits. Given that their profits are primarily coming from extremely similar markets, you absolutely can and should compare their numbers, especially their earnings.
- cinntaile 5y ago
  I don't see how this disagrees with what I said. If you have huge capital expenses because you have your own fabs this will have implications for your future profit potential.
- lobocinza 5y ago
  And also by stories like the GPU shortage.
colinmhayes 5y ago
I really don't buy being fabless as an advantage for amd. It just means they're at the mercy of TSMC and maybe samsung. Especially with apple and it looks like Intel getting into the fabless design game it really just seems like the fabs will be able to squeeze all the profit out.
- NonEUCitizen 5y ago
  You don't have to "buy." Fabless as an advantage for AMD is not a story, it is actual history. AMD used to run its own fab and nearly went bankrupt doing so. It spun off the fab as Global Foundries, and still couldn't catch up due to contractual obligations to use GF which was behind Intel. By eventually switching to TSMC (with new/renegotiated GF contracts; GF still makes glue chips on chiplets and also got some AMD stock), AMD beat Intel with more advanced process (it was already competitive in architecture). Intel is now the one that's disadvantaged by using less than state-of-the-art fabs, the position AMD was in until about 5-7 years ago. Not only is Intel disadvantaged, it's doubling down on fabs, imagining that it will somehow overtake TSMC in the future.
  - colinmhayes 5y ago
    Sure, and definitely made the right love spinning gf off, and it absolutely was instrumental in catching up with intel. But I’m not convinced that it’s an advantage over intel in the long run. TSMC will co to use raising prices as apple, intel, and nvidia all bid up the price of leading edge nodes. AMDs margins will always be worse than intels because of that. Intel doesn’t have to overtake tsmc, it just needs to be close enough to make reasonably competitive chips, which it’s already doing.