Since a reader brought up Intel (INTC) in a comment on my prior post, I decided to take a closer look at the history of the Intel vs Advanced Micro Devices (AMD) battle. It seems to me that whenever AMD was successful taking share from Intel, and the stock price outperformed, it was a short-lived phenomenon. The chart below comparing Intel and AMD since 1998 does a great job showing visually the cycle I referred to in response to Simon’s comment in my prior post.
AMD taking share from Intel, and the resulting stock price rally, is something have happens fairly regularly. However, the chart shows that when AMD takes off it rarely can maintain the business momentum (due mainly to Intel’s high responsiveness to such events), and when optimistic profit estimates aren’t reached, the stock comes tumbling back down to earth. Could history repeat itself? I tend to think it will, although the timing will not be easy to pinpoint.