Intel issues massive warning to investors in AMD stock. Is it time to book profits before November 3?

Intel (INTC -28.58%) reported its third-quarter results on October 29, and the company’s shares crashed more than 28% the next day.

The main reason for the bloodbath in Intel stock was its weaker-than-expected guidance. Even though Intel forecast a strong year-over-year increase in revenue and profits, Wall Street expected more. However, the sharp decline in personal computer (PC) sales this year has offset the impressive gains made by Intel in the data center segment.

This does not bode well for Advanced microdevices (AMD -10.88%). Let’s look at the reasons.

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AMD’s reliance on the PC market could shake investor confidence in the stock.

When AMD reported its second-quarter results in August, the company reported a healthy 23% year-over-year increase in revenue from PC client central processing unit (CPU) sales. The segment’s revenue was $3.1 billion, or 27% of its revenue.

Similarly, Intel’s revenue from its client computing segment increased 13% year over year in the second quarter, to $8.9 billion. However, the situation reversed in the third quarter, with Intel reporting a 5% year-over-year decline in customer computing revenue, to $8.1 billion. The company blamed the decline on poor PC sales, which is not surprising since the market is going through a tough time due to high memory costs and component shortages.

Counterpoint Research estimates that global PC shipments fell 21% year-over-year in the third quarter. The company expects the fourth quarter to be even worse, down 27% from last year. Similarly, Intel noted that the decline of PCs has accelerated recently amid high costs that are straining enterprise IT budgets. So AMD could feel the heat when it reports third-quarter results after the market closes on November 3.

Intel also highlighted that PC shipments would fall by around 10% in 2027, with “year-over-year declines being most pronounced in the first half.” The situation could improve in the second half of 2027 thanks to easier comparisons with last year’s period. However, AMD’s client CPU business could face near-term challenges.

Should Investors Book Profits in AMD Before Their Quarterly Report Is Released?

AMD stock has surged 90% over the past year, which is why investors may be wondering if they should take their profits off the table. Well, overall market sentiment towards artificial intelligence (AI) stocks suggests that taking profits might be the right move. However, if AMD experiences a big drop following its November 3 report, it might be a good idea to buy it for several reasons.

First, Intel’s PC decline isn’t just attributable to problems in the market as a whole. Chipzilla has lost share to AMD in this area. Mercury Research notes that AMD’s share of the client processor market increased 6.4 percentage points year over year in the second quarter. So, AMD may not suffer the same decline as Intel in its PC-focused business last quarter.

Second, Intel noted that demand for AI-focused chips from data centers is increasing. For example, Intel expects shipments of server processors to increase by 30% this year and next. The good news for AMD is that it is also gaining share from Intel in server processors. AMD’s server CPU share in the second quarter was 34.5%, up from 27.3% a year ago.

Thus, the growth of AMD’s data center business could be much stronger than that of Intel, driven by its market share gains and an increase in the prices of server processors due to the shortage of supply. All in all, I won’t be surprised to see AMD do better than Intel when it reports its third quarter results. But if the stock falls after its report, buying it could be a smart move.

After all, AMD’s earnings per share (EPS) are expected to grow at a compound annual growth rate (CAGR) of 65% over the long term, according to YCharts. Additionally, the stock trades at less than 32 times forward earnings, which isn’t that expensive considering its EPS growth is expected to accelerate from 83% in 2026 to 109% next year.

So any potential decline in AMD’s stock following Intel’s quarterly report, as well as its own third-quarter earnings on November 3, can be treated as a buying opportunity due to its tremendous growth potential and valuation.