To support industries struggling with the global semiconductor chip shortage, governments worldwide are taking steps to help ramp up chip production. This, together with breakthroughs in chip-manufacturing processes, should drive the performances of popular chipmakers Advanced Micro Devices (NASDAQ:AMD) and Analog Devices (NASDAQ:ADI). But which of these stocks is a better buy now? Read more to find out.Advanced Micro Devices, Inc. (AMD) and Analog Devices, Inc. (ADI) are two prominent players in the global semiconductor industry. AMD in Santa Calara, Calif., offers microprocessors, chipsets, GPUs, server and embedded processors, semi-custom System-on-Chip (SoC) products, and technology for game consoles, and provides assembly, testing, and packaging services. In comparison, ADI, in Norwood, Mass., designs, manufactures, and markets a portfolio of solutions that leverage high-performance analog, mixed-signal, and digital signal processing technology, including integrated circuits (ICs), algorithms, software, and subsystems for use in industrial, automotive, consumer, and communication markets.
Given the huge demand for semiconductor chips across various industries, governments worldwide are implementing measures to address the lingering supply-demand imbalance by helping semiconductor makers ramp up production. Increasing subsidies and investments should help semiconductor companies benefit from the sky-high demand. Despite the chip shortage, the global semiconductor industry witnessed 27.6% year-over-year sales growth in the third quarter. And rising investor optimism in this space is evident in the SPDR S&P Semiconductor ETF’s (XSD) 18.8% gains over the past month, versus the SPDR S&P 500 Trust ETF’s (SPY) 4.8% returns. The global semiconductor market is expected to grow at a 7.7% CAGR to $778 billion by 2026. So, both AMD and ADI should benefit.
But, while ADI has gained 25.1% in price year-to-date, AMD has surged 38.9%. AMD is a clear winner with 40.8% gains versus ADI’s 12.7% returns in terms of their past month’s performance. But which of these stocks is a better pick now? Let’s find out.