AMD Just Out-Earned Intel in the Data Center. Here's What That Means for Both Stocks.

For decades, the data center was Intel's kingdom. It designed the processors that ran the world's servers, and AMD (NASDAQ: AMD) was an afterthought. That era is over.

In its first quarter of 2026, AMD's data-center segment generated $5.8 billion in revenue -- more than Intel (NASDAQ: INTC) pulled in from the same business over the same stretch. It was another quarter in which AMD out-earned its old rival in the data center, and it reframes the investment case for both stocks.

So, which one does the shift favor from here?

Image source: The Motley Fool.

AMD: the data-center engine takes over

AMD's first-quarter data-center revenue rose 57% year over year to $5.8 billion. That was the standout line in a strong quarter. Total revenue climbed 38% to $10.3 billion, and data center is now the company's largest and fastest-growing business.

Profitability moved with it. AMD's non-GAAP (adjusted) earnings per share came in at $1.37, and even on a GAAP basis the company earned $0.84 per share and $1.4 billion in net income, at a gross margin above 50%. This is a business growing quickly and making money as it does.

One caveat is worth noting. AMD's data-center segment includes its Instinct artificial intelligence (AI) accelerators, not just server processors, so part of the crossover is a graphics-chip story rather than a pure server-CPU win. In server processors alone, AMD still ships fewer units than Intel.

But even there, the trend runs AMD's way. It now captures close to half of all server-CPU revenue while shipping only about a third of the units -- a sign customers are paying up for its higher-end parts.

The stock reflects all of it. AMD shares are up more than 250% over the past year, and the momentum shows little sign of fading.

Both halves of the data-center business are pulling their weight: EPYC server processors for cloud providers, and Instinct accelerators for AI workloads. As long as that mix keeps growing, AMD's profit engine keeps getting stronger.

Intel: cheaper, but for a reason

Intel's data center and AI group is still sizable, generating $5.1 billion in first-quarter revenue, up 22% year over year. That is healthy growth. And by total revenue, Intel remains the larger company, with more than $50 billion in sales over the past year to AMD's roughly $37 billion. Losing the data-center lead stings precisely because Intel is still the bigger business.

The trouble is everything around that growth. Intel is unprofitable on a trailing basis, dragged down by a foundry unit spending heavily to catch up in manufacturing. In the first quarter, that unit brought in less than $200 million from outside customers and lost money.

And the stock has fallen about 21% in just the past week, on reports that its critical 18A manufacturing process may not reach profitable yields until 2027.

The bull case, of course, is that Intel is cheap and turning around. Its most advanced process could still inflect, and its data-center revenue is growing again. For patient investors, that is a genuine value setup.

But cheap can stay cheap. Intel trades at more than 100 times expected earnings precisely because those earnings are depressed today, and the turnaround keeps taking longer than management promises.

Which stock the shift favors

So which is the better buy? Line the two up, and the contrast is stark. AMD is growing faster, earning more in the data center, and turning that growth into profit. Intel is cheaper, but it is losing money, ceding server share, and waiting for manufacturing to ramp up.

The main issue, of course, is valuation. AMD is not cheap. It trades at about 59 times forward earnings, a rich multiple that already bakes in much of its momentum. If data-center growth cools, the stock arguably has room to fall.

So neither is a bargain. Intel is a deep-value bet on a turnaround with a real chance of disappointing. AMD is a premium-priced bet on continued execution.

Between the two, I'd side with AMD. Paying up for the business that is actually winning its market -- growing 38% and converting that growth into profit -- strikes me as the better risk than betting on a rival to undo years of manufacturing setbacks on a timeline it keeps missing. The data-center crown has changed hands, and I think it stays changed.

Daniel Sparks and his clients have 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.