AMD Fell Today -- Is the Stock a Buy Right Now?

Key Points

• AMD stock fell following news that Nvidia is taking a $5 billion stake in Intel.

• Some investors were concerned that a partnership will emerge that threatens AMD.

• Nvidia's investment likely has more to do with Intel's chip foundry business than its chip design business.

• 10 stocks we like better than Advanced Micro Devices ›

Advanced Micro Devices (NASDAQ: AMD) stock lost ground in Thursday's trading following some big news in the artificial intelligence (AI) space. The company's share price fell 0.8% in the daily session and had been down as much as 5.8% early in the day. The chip specialist's valuation moved lower despite a gain of 0.4% for the S&P 500 and a gain of 0.9% for the Nasdaq Composite.

AMD stock fell today following news that Nvidia is taking a $5 billion stake in Intel. The three companies are all competitors in the semiconductor design industry, and some investors saw warning signs for AMD in Nvidia's new investment.

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Is AMD stock a buy right now?

Nvidia's investment in Intel may not pose the risks that some investors traded on today. Rather than the chip design business that is most relevant to AMD, Nvidia's stake in Intel is likely connected to Intel's chip fabrication business. While the big investment naturally suggests a closer relationship between Nvidia and Intel, there's a very good chance that Intel would still be happy to have AMD as a customer for its foundry business. The viability of Intel's foundry business hinges on trust from other chip designers that their designs will not be expropriated by Intel's own design unit.

AMD still occupies second place in the AI processor market, and there are few signs that it is on the verge of imminently surpassing Nvidia. On the other hand, the AI processor market will likely be able to support multiple winners. For long-term investors, AMD could go on to be a big winner.

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Keith Noonan has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.