Can you cash in on AMD's chips?
'AMD' are three letters Intel (INTC) probably wishes didn't exist. AMD, the nickname most investors know Advanced Micro Devices by, has done a surprisingly good job competing against its rival, the world's largest maker of computer microprocessors.
AMD first tackled the Intel-dominated microprocessor market with low-end, low-cost chips. The competition was so fierce that Intel was forced to respond with its low-end line of chips, called Celeron. But most recently, AMD has been taking on Intel on driving high-performance. In fact, some computer gamers have insisted on computers that use AMD chips. Certainly, it's a race that goes back and forth. Sometimes Intel has the fastest chips, while sometimes AMD does.
And just selling fast chips doesn't guarantee a semiconductor company's success. As a litany of failed companies that had fast chips can attest, there's more to financial success than speed. But the fact AMD has been able to hang in there so long underscores that it's a real competitor.
So, what's an investor to do? One thing that makes analyzing AMD so challenging is that it's cyclical — meaning that it's profit can swing wildly depending on what's going on in the broader economy. Even so, we can use a few different tools to help us.