Don’t look now, but it may be time to sell AMD stock.
Intel (INTC 29.12%) stock soared more than 25% in early trading Thursday, and Nvidia (NVDA 3.24%) stock is at least up a couple of percentages, but what about the third giant of the semiconductor manufacturing world, Advanced Micro Devices (AMD -3.22%)?
AMD, it turns out, is down 3% through 10:55 a.m. ET.
Image source: Getty Images.
Intel + Nvidia = bad news for AMD
In case you haven’t heard the news, here’s a quick rundown. This morning, Nvidia announced it will buy $5 billion worth of Intel stock at $23.28 per share. (That’s a 6.5% discount to Intel’s closing share price Wednesday, a sweet deal on Intel stock for Nvidia). The two chips giants will also team up to build new “custom data center and PC products” together.
“Seamlessly connecting Nvidia and Intel architectures using Nvidia NVLink,” Nvidia will add its own artificial intelligence (AI) to Intel’s leading position in chips for PCs to dominate the market for PCs using AI.
Is AMD stock a sell?
Now, if all of this sounds to you like bad news for AMD, I agree. Two of the company’s biggest rivals — in AI, in PCs, in everything high-tech, basically — can now team up to squash AMD like a software bug. Granted, I personally can’t imagine antimonopoly regulators agreeing to let anything like this happen, and I’d expect court challenges to arise.
If they don’t, however, and this partnership is allowed to proceed, I foresee trouble ahead for AMD.
Now, factor in the fact that AMD stock costs an incredible 95 times earnings already — a premium valuation that’s probably no longer justified in light of its diminished prospects — and now might be a good time to sell your AMD stock.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.