The change of leadership at Intel Corporation INTC presents an opportunity to purchase shares of rival chipmaker Advanced Micro Devices, Inc AMD, according to CNBC "Mad Money" host Jim Cramer.
What Happened: Intel shares rallied nearly 7% Wednesday after the company said it would replace CEO Robert Swan with VMware, Inc’s VMW current chief executive Pat Gelsinger in February. On the same day, AMD shares fell almost 4%.
Cramer theorized on “Mad Money” that the change at Intel’s helm presents an opportunity to buy the rival’s stocks.
“As much as Intel needs a change, what matters here is that you’re now getting a chance to buy Intel’s more agile rival, AMD, down more than three bucks, for something that might not even happen: a turn at Intel within the next three years,” said the analyst.
“I’d much rather buy the stock of a company that’s beating Intel to a pulp, AMD,” Cramer advocated.
Why It Matters: Intel is opting to change the hands at the steering when it has lost ground to rivals like AMD, and NVIDIA Corporation NVDA, and lost customers like Apple Inc AAPL.
Cramer said that while Gelsinger — also an Intel veteran — did a good job at VMware, Intel needs someone “new, young, hungry who can shake up the culture, if not blow it up entirely.”
The former hedge fund manager praised the leadership of AMD CEO Lisa Su and acknowledged that the company under her had gone from “always second fiddle to Intel” to “being the one that makes better chips.”
Price Action: Intel shares closed 6.97% higher at $56.95 on Wednesday. On the same day, AMD shares closed 3.75% lower and gained 0.46% in the after-hours session.
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