Finance
Consider these 2 millionaire maker stocks to buy instead
Intel‘S (NASDAQ: INTC) Stock prices have been battered and beaten this month, and August has only just begun. The company’s stock price has fallen 34% since July 30, amid a sell-off that hit numerous stocks. Growing fears of a recession and Intel’s dismal earnings caused investors to panic.
While I firmly believe that we should ride out a market dip rather than sell a tech stock like Intel, that doesn’t necessarily mean now is the time to buy more.
The chart above shows that despite recent declines, Intel’s price-to-earnings (P/E) ratio is significantly higher than other tech stocks. Advanced micro devices (NASDAQ: AMD) And Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) offer similar exposure to emerging markets such as artificial intelligence (AI) and cloud computing, yet trade at a better value than Intel.
In addition to Intel’s shares being poorly valued, revenue and earnings per share (EPS) expectations fell short of expectations in the last quarter (Q2 2024). Meanwhile, AMD and Alphabet’s recent gains illustrate a positive growth trajectory.
So forget Intel and consider buying these two millionaire stocks instead.
1. Advanced micro devices
Shares of AMD have fallen 24% in the past month as technology stocks have fallen out of favor. However, the company boasts a long history of growth, which has seen it produce many millionaires, with its share price increasing by more than 3,000% since 2014.
The company has had tremendous success over the years and has played a crucial role in the chip market. AMD’s hardware powers products in the technology space, from gaming consoles such as Sony‘s PlayStation 5 to consumer-built PCs, laptops, data centers and AI models. As a result, AMD is easily one of the best stocks to gain exposure to various technology areas.
AMD’s closest competitors are Nvidia and Intel, and the three companies are fierce rivals AI chips. Nvidia dominates the industry, while Intel has yet to make any real progress. However, recent earnings figures indicate that AMD’s AI division is on a promising growth path, making gains against Nvidia.
In the second quarter of 2024, AMD’s revenue rose 9% year over year, exceeding expectations by $120 million. Meanwhile, earnings per share of $0.69 beat expectations by $0.01. The quarter benefited from a 115% year-over-year revenue increase in the AI-focused data center segment and a 49% increase in customer sales.
AMD’s gaming segment suffered from the decline in sales of semi-custom chips, with revenue falling 59%. However, that didn’t stop solid growth in the quarter as the company focused its business on AI. Operating income for the period was $269 million, a significant improvement from the $20 million in losses reported a year ago.
AMD’s Q2 2024 proves that it is enjoying an impressive return on its hefty investment in AI and industry gains. Quarterly free cash flow is up 81% year to date, increasing purchasing power. Not only is AMD a better valued stock, but it’s also a no-brainer purchase versus Intel right now.
2. Alphabet
Alphabet’s share price has fallen 17% since early July, paralleling the technology sell-off. However, its forward price-to-earnings ratio of 21 makes it one of the best valued stocks in the technology sector and too good to pass up. Meanwhile, like AMD, recent gains point to a lucrative future for the tech giant.
The Google company reported its second-quarter 2024 earnings at the end of July, with revenue rising 14% year-on-year to $85 billion. The quarter saw solid growth in the advertising sector, with revenue increasing 11%. However, Google Cloud delivered the most profits, with revenue increasing 28% year over year, beating the competition Amazon Web services and Microsoft in cloud growth for this period.
At the start of the year, Alphabet appeared to be falling behind its cloud rivals, but results prove it is quickly catching up. In addition to impressive revenue growth, Google Cloud’s operating income nearly tripled, reaching over $1 billion for the first time. Success in cloud computing is promising for Alphabet as it diversifies its revenues, allowing it to rely less on advertising and secure a promising role in AI.
Alphabet has a long history of making people rich and has undoubtedly created more than a few millionaires, with its stock up 470% in the past decade. With its low price, Alphabet stock is worth choosing over Intel and is an excellent way to invest in technology.
Should you invest €1,000 in advanced micro-devices now?
Consider the following before buying shares in Advanced Micro Devices:
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 calls of $45 on Intel, long January 2026 calls of $395 on Microsoft, short August 2024 calls of $35 on Intel, and short calls in January 2026 from $405 on Microsoft. The Motley Fool has one disclosure policy.
Forget Intel: Consider These 2 Millionaire Maker Stocks to Buy Instead was originally published by The Motley Fool
