Intel Corporation (INTC), Advanced Micro Devices, Inc. (AMD): PC Chips Are Still A Big Problem

Another Chip Option

Interestingly, NVIDIA Corporation (NASDAQ:NVDA) may be a better option than Advanced Micro Devices, Inc. (NYSE:AMD) for those seeking a turnaround play. NVIDIA shares are well off of their highs and the company has a stronger foothold in a key niche, graphics chips. AMD is a major competitor in that market, but NVIDIA Corporation (NASDAQ:NVDA) appears to be better positioned overall. In fact, the company’s top line has been growing of late, instead of contracting.

The graphic chip maker is facing competitive threats from Advanced Micro Devices, Inc. (NYSE:AMD) and Intel, which are both adding graphics chips to their PC chip offerings, but so far that doesn’t appear to be slowing NVIDIA Corporation (NASDAQ:NVDA) down. Moreover, the company is working to establish itself in the mobile graphics space and within the high-powered computer realm. (The heavy math involved in creating graphics dovetails quite nicely with the later business.) It appears to be gaining traction in each.

The shares yield around 2% based on the recently initiated dividend. While earnings have been volatile, and dipped into the red during the 2007 to 2009 recession, the company earned around $0.90 a share in each of the last two years. It has $3.7 billion in cash and investments and no long-term debt, giving it ample firepower to push into its new target markets.

Not in the News

While AMD has been in the news for its console wins and quick share price ascent, it may not be the best option in the chip space. Those who have benefited from the share price pop should probably take some profits. For those with a conservative bent, Intel Corporation (NASDAQ:INTC) is still the 800 pound gorilla and the best long-term option. For those looking for a more aggressive option, NVIDIA looks better positioned to turn its business around than Advanced Micro Devices, Inc. (NYSE:AMD).

The article PC Chips Are Still A Big Problem originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Intel and NVIDIA. The Motley Fool owns shares of Intel. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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