Has Intel Hit A Bottom? (INTC, AMD)

Includes: AMD, INTC
by: Andy So

Intel (NASDAQ:INTC) is currently trading at $20.66. It appears to me that the market is overreacting to the threat that AMD, Advanced Micro Devices, poses to Intel. Investors are forgetting that Intel has deep relationships with OEM’s and distributors that will take AMD some time to develop.

With Microsoft Windows Vista around the corner and poised for a 2006 release, I believe Intel is in a better position to take advantage of surge in demand the new OS release should create. Intel’s share price is off 24.84% compared to its December 2nd, 2005, high of $27.49.

Investors should remember that no company, especially a technology company, is capable of releasing hit after hit. Any company is bound to have a sour product release. For Intel, the company’s latest round of single and dual core processors are significantly slower than their AMD counterparts. I expect AMD to maintain a performance advantage, though quite minor, during the next round of dual core processor releases. If preliminary reports of Intel’s new dual core design are an indication of Intel’s future prospects, the performance advantage that AMD currently enjoys would become a defunct issue.

Here is a quote from Anandtech on Intel’s Core Duo processor:

But what about the bigger picture? What does our most recent look at the performance of Intel’s Core Duo tell us about future Intel desktop performance? We continue to see that the Core Duo can offer, clock for clock, overall performance identical to that of AMD’s Athlon 64 X2.

INTC 1-yr chart:

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