SUNNYVALE, Calif. — Advanced Micro Devices Inc., whose stock is the best performer in the Standard & Poor's 500 Index so far this year, is likely to survive sliding markets and slumping demand better than rivals, investors said.
The computer-chip maker's shares have gained 91 percent in 2001, after falling 4.5 percent last year and being little changed in 1999. Intel Corp., the No. 1 chipmaker and a top holding in most technology portfolios, has fallen 4.6 percent so far this year.
Advanced Micro, long considered an also-ran to Intel, has overcome technical fumbles that plagued it through the 1990s. After overhauling its design and manufacturing practices, the company has won accolades for its speedy Athlon chips and beat Intel to market with several new products last year.
Advanced Micro shares rose $3.16 Thursday, or 14 percent, to $26.45.
"They've positioned themselves pretty well," said Louis Kokernak, senior equity strategist at Martin Capital Advisors, which owns 24,000 Advanced Micro shares. "They're gaining market share on Intel because Intel is finding it difficult to sell people complex microprocessors."
Just a few years ago, investors had all but written off the Sunnyvale, California-based chipmaker, whose shares posted annual declines in 12 of the past 18 years. They complained about Chief Executive Jerry Sanders's strategy, the board's unwillingness to make changes and the lagging returns and mounting losses.
Now, the landscape has changed. The Philadelphia Semiconductor Index has risen just 8.6 percent this year, and the S&P 500 has dropped 15 percent. The 67 percent gain in the No. 2 performer in the S&P—Dillard's Inc.—is well behind Advanced Micro's return.
"Reputations are built very slowly and destroyed very quickly, and AMD is doing a great job," said Nathan Brookwood, an analyst with chip-market researcher Insight 64. "As we go into the current quarter, it would make it two years with hardly a visible misstep, which has to be a record for AMD in the microprocessor business."
Advanced Micro shares rose $3.16 Thursday, or 14 percent, to $26.45.