Why AMD Stock Surged as Intel Faces Earnings Challenges on Friday

Intel delivered a mixed earnings report that sent shockwaves through the semiconductor industry Friday morning. While the chipmaker exceeded fourth-quarter revenue expectations with $13.7 billion in sales and beat earnings with $0.15 per share (double analyst forecasts), investors quickly soured on forward guidance. The company warned of significant headwinds ahead, sending its stock into a steep decline of over 15%.

Meanwhile, Advanced Micro Devices took the opposite trajectory. AMD stock jumped 3.8% as investors repositioned capital toward the company better positioned to capitalize on Intel’s challenges. The divergence reveals an important dynamic: when one semiconductor player struggles with production capacity, competitors with functioning supply chains stand to gain.

The Intel Earnings Reality Check

Intel’s Q4 performance initially looked solid. The $300 million revenue beat exceeded Wall Street consensus expectations, and earnings per share came in at double the anticipated level. However, the semiconductor giant then delivered devastating guidance for Q1 2026.

The company projects Q1 revenues could dip to just $11.7 billion—a stunning $2 billion decline from Q4 and roughly $850 million below analyst expectations. Even more concerning for shareholders, Intel warned it may barely break even on earnings next quarter, with minimal chance of hitting the $0.05 per share Wall Street anticipated.

Supply Constraints: A Silver Lining for Competitors

The root cause of Intel’s guidance collapse traces to a critical supply problem. CFO David Zinsner specifically highlighted that production will hit “its lowest level in Q1 before improving in Q2.” This supply crunch won’t be temporary—it’s expected to persist through at least the second quarter.

For the broader semiconductor industry, this creates an interesting market dynamic. When established players face capacity constraints while demand remains steady (particularly from the AI chip segment), basic economics dictate rising prices. Higher pricing translates directly to improved profit margins and stronger profitability for suppliers without comparable supply issues.

Advanced Micro Devices, with functioning production capacity, becomes a natural beneficiary. As customers seek alternative sources for chips Intel cannot supply, AMD captures incremental market share and improved pricing power.

Valuation Perspective on AMD Stock

At 133 times trailing earnings, AMD stock cannot reasonably be described as inexpensive by traditional valuation metrics. The semiconductor sector has commanded premium multiples given the strategic importance of chip production and AI-driven demand tailwinds.

Yet from a relative value perspective, Intel’s warning creates an immediate advantage for Advanced Micro Devices. The supply dynamics favor AMD’s competitive position heading into the crucial second half of the year.

The Bigger Picture for Investors

Intel’s stumble Friday demonstrated how quickly fortunes shift in competitive technology markets. A company beating earnings and revenue expectations still faced a 15% stock plunge due to disappointing guidance. For Advanced Micro Devices, the inverse occurred—modest gains reflected the improved competitive landscape.

The Motley Fool Stock Advisor team has identified what they believe are the 10 best semiconductor and technology stocks for the current market environment. Historical returns on previous recommendations have been substantial—Netflix delivered 450-plus times return when recommended in December 2004, while Nvidia generated over 1.1 million percent returns since its April 2005 recommendation.

Before making investment decisions in AMD stock or any semiconductor company, investors should evaluate their complete research and conviction level, recognizing that supply dynamics and competitive positioning remain fluid in this rapidly evolving industry.