Two Ways to Profit From Explosive Growth in Micro Servers: Intel Corporation (INTC), ARM Holdings plc (ARMH)

Most of the micro server software is specific to the x86 architecture, which is right up AMD’s alley. Unlike ARM Holdings plc (ADR) (NASDAQ:ARMH), a smallish ($20 billion capitalization) chip maker with a strong mobile computing presence, AMD won’t have to ask customers to shift from existing micro server products to gain market share. Though ARM is slowly gaining fans in the OS and software industries, it’s waging a battle for micro server market share that AMD doesn’t face.

Even though the micro server market was, in essence, developed by and for Intel, AMD has a real opportunity in the coming two or three years. The prospects for AMD are big enough that the article I wrote just a few weeks ago, “Better Tech Value Play: Intel or AMD?” needs some qualification.

Intel’s efforts to shift from PCs to mobile and cloud computing will be recognized by investors at some point. There are simply too many upsides to ignore forever. When it happens, Intel will finally break out of what has been a meandering stock price. AMD, on the other hand, has been hit by multiple delivery problems and was slow in shifting its focus away from PCs.

But the potential presented by the micro server market changes things. Now, AMD is worth another look, particularly if you’re in search of an aggressive growth opportunity for your portfolio. Does AMD jump past Intel as the better investment alternative? I wouldn’t go that far; Intel’s further along than AMD in its transition to mobile and cloud computing, and its 4.3% dividend is a whopper. With that said, don’t reject AMD out of hand, not anymore. Micro servers could prove to be a real catalyst in its return to relevancy.

The article Two Ways to Profit From Explosive Growth in Micro Servers originally appeared on Fool.com and is written by Tim Brugger.

Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Intel.

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