According to data from Grand View Research, the artificial intelligence (AI) market is projected to reach nearly $200 billion in 2023 and maintain a compound annual growth rate of 37% through at least 2030. At this trajectory, the industry is expected to reach nearly $2 trillion, proving that it's not too late to invest.
AI-related stocks have captivated Wall Street in the last year, with bullish investors pushing up their shares. Nasdaq Composite Index It's up 27% since June of last year. Chip stocks posted the biggest gains because they're essential to the industry's development as providers of the hardware needed to train and run AI models. So now may be a good time to add them to your portfolio as demand soars.
Two of the most attractive options are Intel (Nasdaq: INTC) and Advanced Micro Devices (NASDAQ: AMD)As more companies enter the industry and require more powerful hardware, these companies will benefit from the AI tailwind for years to come.
Let's compare these two chipmakers and determine whether Intel or AMD is the better AI stock in June.
Intel
Intel has lagged behind its rivals in AI. NVIDIA And then there's AMD. But recent developments suggest the company isn't giving up and could make big gains in the coming years. With Intel still in its infancy in AI, it may be worth investing in it now to reap the benefits in the long run.
On June 4, Intel unveiled a new AI chip for data centers, just days after similar announcements from Nvidia and AMD. Intel CEO Pat Gelsinger said the company's Xeon 6 processors offer improved performance and power efficiency for intensive workloads compared to the previous generation.
In the same presentation, Intel announced pricing for its Gaudi 3 AI accelerators that was lower than similar products from competitors. AI chips have become expensive, especially from market leaders like Nvidia. If Intel can offer competitive pricing and performance, it could attract more customers to its AI products and take market share from Nvidia.
Beyond new chips, Intel is also differentiating itself from competitors by investing heavily in manufacturing: The company is building chip factories across the US, and Gelsinger recently said that the Ohio factory will be “the nation's AI systems factory.”
Intel is banking on AI in both chip design and manufacturing, making it an attractive long-term business with the potential to deliver big benefits as it expands.
Advanced Micro Devices
Like Intel, AMD is working hard to take on Nvidia on AI. “AI is clearly a top priority for us, and we've been leveraging all of our internal development capabilities to make it happen,” CEO Lisa Su told reporters at the Computex technology trade show in Taipei this month.
The company announced a new AI graphics processing unit (GPU) last year and this month it unveiled its latest AI chip, the MI325X accelerator. The new chip is expected to be available in the fourth quarter of 2024, and follows Nvidia's recent decision to move to annual chip updates rather than releasing upgrades every two years as in the past.
At the conference, AMD unveiled its MI350 series of chips, which will launch in 2025 and are based on an entirely new architecture. AMD says the new chips will deliver a 35x improvement in inference performance and significantly improve AI capabilities.
AMD still has a long way to go before it can make significant inroads into Nvidia's AI market share, but recent earnings suggest the company may be moving in the right direction: In the first quarter of 2024, its AI-driven data center division saw revenue grow 80% year-over-year on rising GPU sales.
Which is the better AI stock: Intel or AMD?
Intel and AMD are in fierce competition with each other and market leader Nvidia in the AI space, and the industry's huge potential and surging demand for chips suggest there's room for each of these companies to find a niche and profit from generative technology.
However, Nvidia's market-leading position and its forays into manufacturing make it seem like these companies may be better positioned in AI than AMD in the long run.The chart below shows that Intel's stock is trading at a much better price than either of them, with the lowest forward earnings and sales multiples of the big three chipmakers.
Given its recent release of AI chips and forays into manufacturing, Intel stock is a better choice than AMD and a stock to buy now for long-term investors.
Should I invest $1,000 in Intel right now?
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Dani Cook has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel and has recommended buying Intel's January 2025 $45 calls and selling Intel's August 2024 $35 calls. The Motley Fool has a disclosure policy.
Best Artificial Intelligence Stocks: Intel vs. AMD was originally published by The Motley Fool.
