AMD is now a bigger company, by market capitalization, than Intel. It may be close, but AMD has passed Intel for the first time in the company’s history with a ~$197.75 billion market cap at the close of the market on February 15 compared to Intel’s $197.24 billion. AMD’s sudden market cap surge comes on the back of its blockbuster $49 billion acquisition of Xilinx, the largest semiconductor acquisition in history.
AMD’s acquisition of Xilinx triggered the conversion of 248.38 million Xilinx shares into 428 million new AMD shares. Added to AMD’s existing 1.2 billion shares, that brings the company’s overall share count to 1.628 million, giving AMD a market cap of $197.75 billion that squeaks past Intel by a mere $51 million. (There might be some variance in calculations from the various third parties, but all should place AMD in the lead over Intel at current stock valuations.)
That marks a stark reversal for a company that was teetering on the brink of bankruptcy a mere six years ago when it first unveiled its revolutionary Zen CPU microarchitecture. Six years of relentless execution later, AMD now has an all-time high share of the CPU market, giving it the cash to ink the biggest semiconductor deal in history.
However, we do have to remember that Intel is the larger company by far and commands ~75% of the overall x86 market share. Intel also generates far more revenue and profit per year than AMD and is coming off its sixth year of record revenue. That’s not to mention that the firm makes its own chips and owns a global network of fabs, whereas AMD designs chips and outsources production.
Taken in context, AMD’s valuation signals that the market generally has more optimism about the firm’s growth prospects than Intel’s. There are plenty of reasons to be bullish: AMD’s recent acquisition of FPGA-maker Xilinx brings a broad portfolio of differentiated silicon products under the company’s umbrella, opening up new, profitable climes like automated driving, aerospace, 5G/communications, and IoT markets, to name a few.
Xilinx is a healthy company, too, as its recent 3Q earnings included a record quarterly revenue of $1 billion, a 26% increase year-over-year. Meanwhile, Intel’s comparable unit, its Programmable Solutions Group (PSG) that sprung from its $16.7 billion Altera acquisition, has had more than its fair share of struggles over the last few years as Xilinx has eaten away at its market share. Intel also revealed during its last earnings call that its PSG unit has been abnormally impacted by supply constraints over the course of 2021, causing a predicted loss of $500 million in additional revenue.
Meanwhile, AMD is hitting the ground running with Xilinx — the company expects its first ‘blended’ products, meaning devices with both AMD and Xilinx logic, to come to market in 2023.
Times are good for AMD, it also surpassed Qualcomm on the market cap list, but Nvidia is also having a stellar run as well — the company’s $662.38 billion market cap exceeds both AMD and Intel, combined.
AMD’s new market cap is a far cry from July 2020 when the company’s stock price surpassed Intel’s for the first time in 15 years but it only had a market cap of $74 billion compared to Intel’s $260 billion. Back then, Intel’s stock was worth $61.57 compared to AMD’s $61.79, but the picture is quite a bit different now with Intel’s stock weighing in at $48.44 compared to AMD’s $121.47.
Intel certainly isn’t content to see its market share being whittled away and has shown signs of a comeback in the client market. Intel CEO Pat Gelsinger has also bet the future of the company on a new vision that includes producing chips for other firms via its IDM 2.0 strategy and has boosted the company’s R&D spending to recent highs. We’ll learn more about those efforts in a few days during Intel’s investor event on February 17.
