Where We See Value in Tech Stocks
Wide-moat Intel shares look very attractive, while no-moat AMD shares are overvalued.
Abhinav Davuluri: Intel remains one of our top picks in the technology sector despite several headwinds faced in the near term. In addition to U.S.-China tensions that have impacted much of the semiconductor space, Intel has also been dealing with a resurgent AMD that is now more competitive than it's been in the prior decade. For context, Intel currently sits at a dominant market share position across the PC and server processor markets.
However, AMD’s recent launches in the desktop and server markets on a more advanced 7-nanometer process technology have caused the market to extrapolate significant market share gains for AMD at Intel’s expense, with both stocks reacting accordingly. We do not dismiss Intel’s own manufacturing issues, and we do forecast share gains for AMD in the near term. However, we challenge the current sentiment that Intel will be unable to provide a competitive response. Intel’s equivalent 10-nanometer parts for laptops will launch later this year, while their server parts will be out in 2020, which we think will help mitigate share loss.