For the second straight day, Advanced Micro Devices, Inc. AMD and Intel Corporation INTC are on the move following a note from BlueFin Research suggesting Intel’s 10nm chips could be in production sooner than expected.
What Happened
AMD stock has gained more than 200 percent in 2018 and just came off its best quarter in nearly 30 years in the third quarter on hopes that Intel’s production issues would create a major opportunity for AMD to gain market share. However, BlueFin’s report indicates AMD’s window of opportunity may be closing fast.
Intel’s previous statements that the 10nm chips would be available by the 2019 holiday season may be on the conservative side, according to BlueFin's Steve Mullane.
“Currently, the semi material and equipment suppliers are prepping for the ramp to begin in June 2019, but several suppliers have had informal discussions on the possibility that the ramp could be pulled in by 4-6 weeks,” Mullane said in the note.
Why It's Important
Intel shares have gained 3.5 percent so far this week, while AMD's stock has tanked 12 percent. Graphics card competitor NVIDIA Corporation NVDA is up about 1.2 percent this week.
Some of the AMD selling may simply be traders taking profits on AMD’s massive 2018 gains, but other investors may be concerned AMD is simply priced for a perfection that will be difficult to deliver.
What's Next
MKM Partners analyst Ruben Roy said Tuesday AMD has done an admirable job in executing its product strategy, but there’s plenty of risk in the stock at its current levels.
“With valuations reflecting the best possible scenario, we think that there could be better opportunities coming up if there are hiccups,” Roy said.
While AMD struggles, Intel kicked off Q4 by closing above its 50-day moving average on Tuesday for this first time since mid-June.
AMD traded around $27.21 at time of publication, down 6.2 percent on the day. Intel shares were up 1.3 percent at $48.74.
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