Intel Corporation (NASDAQ:INTC) has been holding up well over the past few days. That’s despite the big selloff in the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) led by Facebook Inc (NASDAQ:FB). I think it makes Intel stock even more attractive.
It’s especially impressive given the selloff in Advanced Micro Devices, Inc. (NASDAQ:AMD) and Nvidia Corporation (NASDAQ:NVDA). Does that mean investors should go with Intel stock over NVDA and AMD?
Honestly, all three of these names have great secular tailwinds at their back. For that reason, I recently recommended investors to consider a basket approach to this group. And as much as I do like Intel, I am more tempted to go with AMD and NVDA if I’m not buying all three.
Why AMD Over Intel Stock?
Sure, AMD puking from about $12 down to $10 doesn’t look all that good, but this level has proven to be strong support over the past 18 months. If it doesn’t hold now, conservative investors can bail on the name with minimal losses. However, patient investors — even those that have a sub-12 month outlook — can see massive returns on their investment.
Near $13.50 there’s a looming downtrend of resistance (black line). Even if AMD stock rallies to $13 and fails again, that represents 30% upside from current levels. It’s hard to image Intel stock rallying 30% in the next few months like AMD could.
I’m not comparing product quality or margins here. I’m simply talking about risk/reward. From a business perspective, AMD is getting a lot better, but it’s stock has taken a beating. I’m okay with buying into the pain and looking for a sharp rebound over the next 3 to 12 months.
Why Nvidia Over Intel Stock
I consider Nvidia the best-of-breed name in this space. The company continues to dominate seemingly every space it enters. It’s seeing intense growth thanks to CEO Jensen Huang’s push into graphics, artificial intelligence, self-driving cars, cloud storage and data centers. Its efforts have paid off handsomely, with NVDA stock rallying almost 1,000% over the past three years.
However, on March 27, the same day Huang gave the keynote presentation at Nvidia’s GTC conference, shares plunged almost 8%. No, it wasn’t an earnings miss. Instead, the company confirmed reports that it’s temporarily suspending its self-driving car tests on public roads.
Is this an overreaction? Most certainly. The company made the move after a self-driving Uber car struck and killed a pedestrian earlier this month. However, NVDA said it will continue pursuing this technology, as it ultimately improves driver safety.
There’s a ton of support near $220. There’s trend-line support (in purple), level support (in black) and while it’s hard to see, there’s also the 100-day moving average in green. It’s been almost a year since NVDA stock closed below the 100-day.
So What About Intel Stock?
The argument you could make against NVDA and AMD and for INTC is the valuation.
| P/E (2018 est) | P/E (2019 est) | P/S (2018) | |
| NVDA | 36 | 31 | 11 |
| AMD | 26 | 18.8 | 1.5 |
| INTC | 14.5 | 13.4 | 3.7 |
Nvidia is easily the most expensive stock. However, investors might want to take these forward-looking estimates with a grain of salt. That’s because Nvidia tends to not only beat estimates, but mercilessly crush analysts’ forecasts. Also worth pointing out is that AMD trades at the lowest sales-based valuation, although it’s also worth noting that it has the lowest margins.
Finally, while Intel stock would generally be considered the cheapest of the group, it also has the lowest growth estimates:
| Rev Growth ‘18 | Rev Growth ‘19 | Earnings Growth ‘18 | Earnings Growth ‘19 | |
| Nvidia | 27.3% | 15% | 35.1% | 15.6% |
| AMD | 17.8% | 7.8% | 123.5% | 39.5% |
| Intel | 3.5% | 3.6% | 2.6% | 6.8% |
The Bottom Line on Intel Stock
Intel stock is up massively from last summer. The same can be said be said for NVDA, but again, this is a best-in-breed stock with immense growth, as evidenced above. About 10% off its highs and NVDA is starting to look too attractive for long-term investors. Further declines are buys too.
After its big selloff, AMD also looks tempting, given its huge earnings growth over the next two years.
Intel is a great company and I have no doubt that the Internet of Things, autonomous driving and other secular themes will elevate its stock.
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Even though INTC stock has been impressive, I’d rather wait for a pullback like we have with NVDA and AMD. If that comes to fruition, $47 seems like a reasonable spot to consider nibbling.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long AMD and NVDA.
