Let’s not mince words. Advanced Micro Devices (NASDAQ:AMD) caught Intel (NASDAQ:INTC) with its proverbial pants down. After years of lazy coasting that mostly leveraged the well-established Intel name, a largely-left-for-dead AMD came roaring back with a new product lineup that its bigger rival just wasn’t ready for. Advanced Micro Devices is going to beat Intel to the 7 nanometer finish line, much to the chagrin of INTC stock owners.

With the initial shock and the bulk of the corresponding damage now in the rearview mirror, though, there’s a ray of hope shining through. Intel has turned up the heat on multiple R&D fronts, and will eventually catch up its smaller rival.

It won’t be a short process though, and more than that, it will be anything but cheap.

Intel Caught Off Guard

Though Intel knows it lost the mobile processor race to Nvidia (NASDAQ:NVDA), it thought its dominance of the server and computer CPU market was quite secure.

A year ago, Intel processors were found in more than three-fourths of actively used computers. But, it was wrong for Intel to assume its wide lead was secure. Advanced Micro Devices has been developing a brand new series of central processing units, nicknamed Ryzen, that were almost as powerful as Intel’s offerings and far more bang for the buck.

Ryzen for high-performance personal computing was only the initial salvo, however. Given many of the same underlying architectures, AMD has also taken aim at the server market with its Epyc processor. It was a direct shot at Intel’s Xeon line, ultimately forcing Intel to lower its prices on that front.

That was only the beginning of the disruption though. The best may be yet to come. As Advanced Micro Devices’ Mark Papermaster CTO explained in August, “We knew 7nm would be a big challenge, so we made the bet, we shifted our resources onto the new node. We didn’t just dip our toe in the water. We went all in.”

The promise of 7 nm, or nanometer, computing is intoxicating. Referring to the space between transistors on a CPU, these processors promise to require even less time to send or receive electron-based digital data from different parts of a computer.

A 7 nanometer processor makes compute speeds of 5 GHz possible, whereas most processors in use now are capped at around 3 GHz using 14 (or more) nanometer technology.

Intel has toyed with its own 7 nanometer fabrication, but didn’t take it too seriously until it had to, when it became clear AMD was miles ahead of it.

Turning Up the Heat, at a Price

The good news is, Intel is ramping up activity on its R&D front. The bad news is, it takes time to achieve results in the world of computer technology. The ugly reality for owners of INTC stock is, the company is going to have to spend heavily in order to catch up with Advanced Micro Devices on the research and development front.

Within its third-report, Intel disclosed it was budgeting $15.5 billion in capital expenditures for all of 2018 and had already deployed $14.0 billion of it.

That’s fine. A company has to spend money to make money. But, the figures as of the third quarter’s end are notably higher than the 2018 CapEx outlook of $14.0 billion offered at the end of 2017.

And that was a budget made before Intel fully realized just what a threat AMD had become. It’s a figure that may also not fully reflect the complete extent of the threat Advanced Micro Devices actually poses.

With the company adding options like customized chips for data centers and a decision it likely didn’t want to make to outsource the production of lower-end CPUs to a third party, it’s not crazy to wonder if planned expenditures could continue to grow.

Bottom Line for INTC Stock

Again, it takes money to make money. The expenditures in the works arguably should have been made long ago, and though behind, the accelerated spending plan will likely help Intel reclaim what’s been lost to AMD; even if it takes well into next year to do so.

It could be an uncomfortably expensive year, however, to existing or future owners of INTC stock. For an organization that’s only reported a profit of a little over $13 billion for the past four quarters, even adding just another billion in capital expenditures for the coming four quarters could take a measurable toll on the bottom line.

Remember, it added $1.5 billion in CapEx plans in the first three quarters of 2018.

Just be prepared for the possibility.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.