Not long ago, the trio of chip stocks to watch was Intel (NASDAQ:INTC), Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD). While Nvidia and AMD had explosive gains in the past, the hope was that INTC stock could capitalize as well.
That hope hasn’t come to fruition though.
Over the past year, AMD and Nvidia are up 35% and 90%, respectively. Both dominate INTC stock, which was up just 1.5% before earnings. After reporting on Oct. 22 though, the stock is down 3% for the year. Heck, even the broader market crushes Intel’s performance.
The further out in time we go, the worse it gets. In the last three years, Intel is up 6%. But that badly lags Nvidia’s 400% gain and AMD’s 600% ascent. Let’s not bother going out to the five-year window, where both AMD and NVDA’s gains top 1,300%.
The question isn’t “Has Intel been better?” Instead it’s “Is Intel a better buy?”
Unfortunately for longs, I don’t think the answer is any different. Both turn out to be “no.”
Breaking Down Intel
It’s been one blow after the other. Intel’s chips simply aren’t what they used to be and others – namely Nvidia and AMD – are leaving it in the dust. Apple (NASDAQ:AAPL) is moving away from Intel’s chips for its Macs in favor of its own silicon.
Then Intel’s own issues with its 7nm chips last summer is what allowed AMD to gain even more ground. Put simply, AMD is eating Intel’s lunch and its margins are flying higher in the process.
Analysts have been insanely wrong on their estimates for Nvidia. In fact, the same can be said for AMD. In both cases, analysts have been way too conservative. As a result, we’ve seen revenue expectations climb by billions of dollars over the last few quarters.
For Intel, analysts were actually too aggressive, which is a disaster for the stock price.
Coming into the year, analysts were expecting just over $75 billion in revenue for Intel this year. While that estimate dipped to as low as $71 billion, it now sits at about $73.75 billion.
But do you see the problem? There’s no momentum. No upside surprises. No “we’re doing so good we’re blowing away estimates and raising our guidance.” There’s just no excitement here and the stock’s 6.5% year-to-date loss highlights as much.
Growth Lacks vs Nvidia and AMD
In reality, consensus estimates have been pretty accurate for Intel. If the company reports in-line results, it will translate to a 5.5% decline in sales this year and a 0.7% dip next year. On the earnings front, that translates to an earnings decline of 9.6% and 7.7% in 2021 and 2022, respectively.
In 2023, estimates currently call for 5.4% growth. However, there’s a few problems with that.
First, it’s an estimate several years into the future and is subject to being wrong. Second, it’s likely woefully short of what AMD and NVDA will do in the future. For what it’s worth, current estimates call for roughly 13% revenue growth in 2023 for both companies, respectively.
Third and lastly, even if Intel does generate 5.4% growth, it will mean $77.08 billion in revenue. While that’s a sizable sum, it’s still short of the company’s 2020 revenue figure of $77.87 billion.
Admittedly, INTC stock is cheaper than AMD and Nvidia, trading at just 11.5x this year’s earnings. But without another reason to buy the stock, the valuation alone isn’t enough of a catalyst.
Trading INTC Stock
Above is a multi-year look at INTC stock via a weekly chart. For the most part, Intel has done a pretty good job riding the 200-week moving average higher. The exception is the coronavirus correction in early 2020.
Just about every stock broke down at that point, so it’s hard to fault Intel. I don’t.
INTC stock was doing a great job riding the 200-week and 50-month moving averages higher. However, the stock is breaking below these measures after a bearish post-earnings reaction.
It’s also rotating below this month’s prior low, now near $48 at the time of this writing. Prior to Intel’s post-earnings decline, the stock was pushing over downtrend resistance (blue line), as well as the 10-week and 21-week moving averages. Unfortunately for bulls, the technicals aren’t very attractive.
Is INTC stock a better buy than Nvidia or AMD? No, not in my mind. It lacks growth and momentum, two things I like when I’m investing in a business. Further, in a single session, the technicals have gone from “actually pretty good” to “no thanks.”
Conversely, both AMD and Nvidia have solid technical setups as well.
For now, I’d rather be long the premiere chipmakers than Intel.
On the date of publication, Bret Kenwell held a long position in NVDA and AMD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.