Why Advanced Micro Devices Stock Popped Friday

Intel (NASDAQ: INTC) stock's in freefall this morning, down more than 15% after announcing an earnings beat but a guidance miss. Advanced Micro Devices (NASDAQ: AMD) stock, on the other hand, is headed in the opposite direction.

AMD shares gained 3.8% through 10:05 a.m. ET Friday. The big question is why?

Image source: Getty Images.

What Intel said, and....

Intel crushed on earnings last night, reporting sales of $13.7 billion ($300 million more than Wall Street analysts expected), and adjusted earnings of $0.15 per share -- twice analyst guidance. Unfortunately for Intel investors, the company followed up this good news with some bad.

Q1 2026 sales and earnings will both fall far short of consensus expectations. Sales could be as little as $11.7 billion ($2 billion below Q4 and $850 million below analysts' forecasts). And Intel will be lucky to just break even on earnings this coming quarter, with little chance of earning the $0.05 that Wall Street wanted.

...what it means for AMD

What does all this mean for AMD? Intel continues to suffer from a supply shortage, and that shortage is going to get even worse in Q1 -- and probably will remain a problem in Q2. CFO David Zinsner warned Q1 supply will be "at its lowest level in Q1 before improving in Q2."

Weak supply at Intel means a supply crunch for the semiconductor chips industry at large. And as Economics 101 taught us, given steady or rising demand (for AI chips), low supply means higher prices. That probably means strong profit margins and stronger profits for everyone competing with Intel, AMD stock included.

I cannot call AMD stock "cheap" exactly at 133 times earnings. But Intel's report is still good news for AMD stock today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool has a disclosure policy.