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Why CES 2022 was Bad News for Advanced Micro Devices

CES 2022 — the consumer electronics industry’s most important annual event — has just wrapped up in Las Vegas. Advanced Micro Devices, Inc. (NASDAQ:AMD) stock announced new mobile GPUs as well as the eagerly anticipated Ryzen 6000 series laptop processors.

AMD stock: Image of the Advanced Micro Devices (AMD) logo outside of a corporate building
Source: Sundry Photography / Shutterstock.com

AMD has been trouncing rival Intel Corporation (NASDAQ:INTC) in recent years, gaining computer processor market share at Intel’s expense as that company floundered. AMD has hit an all-time high share of laptop processor market share and the Ryzen 6000 CPUs have been seen as the key to accelerating that growth. However, AMD stock slumped by over 7% during the week.

In contrast, INTC stock has popped. What’s going on here? Did AMD drop the ball with its new Ryzen chips? Here’s an overview of what went down at CES 2022, why Intel is suddenly in the spotlight, and why there’s no need for AMD investors to panic.

Intel Fights Back

Going back to 2016, Intel dominated the market for computer processors. Globally, 82.5% of computers sold were equipped with Intel CPUs. AMD had just 17.5% of the market. 2016 was a critical year for AMD.

However, that December, the company announced a new series of processors called Ryzen. AMD’s new chips slowly began to eat away at Intel’s lead. AMD relentlessly improved and moved forward with advanced chips while Intel began to fall behind in its release schedule. As Ryzen chips got better, Intel suffered a corporate meltdown, chewing through CEOs and delaying new processor releases.

By last November, AMD had capitalized on Intel’s flailing to the point that its computer CPU market share reached the highest level since 2006. Worse for Intel, AMD was now making big inroads in the laptop market. Powered by the Ryzen 5000 mobile processors revealed at last year’s CES 2021, AMD’s share hit 22% — an all-time high — at a time when remote working has goosed laptop sales. The Ryzen 6000 series made its debut at CES 2022. However, this time Intel had an answer.

Intel unveiled 12th generation Intel Core mobile processors that employ a new hybrid architecture. Intel claims this is the biggest leap forward for its chips in a decade. The company immediately laid claim to having the world’s fastest laptop processor in the Core i9-12900HK.

The market reacted by punishing AMD stock, and giving INTC a bump.

CES Innovation Awards Chose AMD, Not Intel 

Where things get interesting are the CES Innovation awards. Every year, the Consumer Technology Association announces Innovation awards for “outstanding” products shown at that year’s CES. The judges include consumer technology engineers, designers, and media representatives.

At CES 2022, the AMD Ryzen 6000 series mobile processors received an Innovation award. Among the reasons listed for the recognition was the fact that the Ryzen 6000 series laptop chips are the first to be equipped with integrated graphics that are powerful enough to play demanding PC game titles without the need for a standalone GPU.

Intel’s new hybrid 12th generation Core processors failed to score a mention. It’s possible that Intel chose not to enter them in the competition. However, Intel did win a CES 2022 Innovation award for its Thunderbolt 4 connectivity standard. So the company was participating.

Is there a takeaway here? Intel’s dramatic mobile processor reveal made headlines, but the tech insiders are still looking at AMD’s Ryzen laptop chips as the horse to beat. 

Intel Will Take on AMD and Nvidia

Adding to the pro-Intel sentiment was news at CES 2022 that computer OEMs now have access to Intel’s new Arc GPUs.

For decades, the computer graphics card market has been split between AMD and Nvidia (NASDAQ:NVDA). Now Intel is entering the fray. Of the two GPU makers, Nvidia should probably be the most worried about this development. AMD and Intel both make computer CPUs, so they can integrate their own GPUs in their processors. They also have an opportunity to bundle their processors and graphics cards with OEMs.

Not surprisingly, NVDA stock was also down through CES 2022.   

Bottom Line

AMD stock has performed spectacularly since the company began its resurgence in late 2016. Over the past five years, it’s delivered a return of 1,187%. 

That being said, Intel is showing signs of finally getting its act together, and that is likely to mean challenging times ahead. I don’t think anyone’s expecting Intel to start pulling market share from AMD on the computer processor front. AMD’s Ryzen chips are extremely popular these days. However, Intel’s turnaround efforts are likely to slow AMD’s heady gains in recent years. 

As for Intel’s entry into the graphics card market, that’s a wait and see situation. The first generation Arc GPUs are going to have a hard time competing against the best from AMD and Nvidia. They’ll also have a battle winning over consumers and software developers who need to write drivers to optimize their performance.

The bottom line is this Portfolio Grader “B” rated stock is still positioned for long-term growth. The qualifier is that Intel is shaping up to be a serious competitor once again. If it succeeds, Intel’s recovery could well have the effect of keeping AMD stock growth at lower rates than the numbers investors have been enjoying in recent years.    

On the date of publication, Louis Navellier had a long position in AMD and NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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Article printed from InvestorPlace Media, https://investorplace.com/2022/01/why-ces-2022-was-bad-news-for-advanced-micro-devices/.

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