Intel (INTC) and Advanced Micro Devices (AMD) have both reported impressive first-quarter results, with their stocks surging 13.96% and 11.44%, respectively. The driving force behind this growth is the escalating demand for central processing units (CPUs), fueled by the rise of agentic artificial intelligence (AI). While GPUs have historically dominated the AI conversation, CPUs are now gaining prominence due to their essential role in managing workloads and data for AI tasks.

Intel’s turnaround has been remarkable, with a 186% year-to-date stock increase, driven by a successful pivot towards a foundry model and a focus on optimizing CPU architecture. Despite this, Intel is still operating at a loss and trades at a high valuation of over 104 times forward adjusted earnings. In contrast, AMD, which operates as a fabless company, has also reported strong earnings and a 57% year-over-year increase in data center revenue, benefitting from both CPU and GPU demand.

Investors should carefully consider entry points for both stocks, as significant gains have already been realized this year. While AMD may currently appear to be the better investment, particularly with its established GPU presence, Intel’s potential in the CPU market and future GPU developments could reshape the competitive landscape.

Source: fool.com