Back in 2011, semiconductor chip maker Advanced Micro Devices, Inc. (NYSE:AMD) generated about $100 million in free cash flow. Since then, it has bled cash. On an earnings basis, AMD stock was also last profitable in 2011. Those are two pretty long dry spells.

Sales also haven’t moved much for the better part of a decade. In addition, Advanced Micro Devices has a fair amount of debt (around $2 billion), and has accumulated $7.3 billion in deficits on the balance sheet.

This indicates it hasn’t generated a cumulative positive return for AMD stock owners since it was founded in 1969.

The profit outlook for Advanced Micro Devices is pretty grim. Analysts are projecting a loss of 23 cents per share for the company’s full year (AMD reports its fourth quarter on Jan. 17). But 2017 could see a return to profitability, as analysts expect 6 cents in earnings for the year.

A recent investor presentation on AMD’s website does tout that the company is a leader in “visual” computing that includes gaming, artificial intelligence and virtual/augmented reality. It is a claim-to-fame that resembles why rival Nvidia Corporation (NASDAQ: NVDA ) is popular among investors right now.

I recently covered why Nvidia’s stock has been on fire. NVDA also sells chips that power the gaming and AI space, but also data centers. The greatest hype surrounds its autonomous car initiative, including the Nvidia Drive PX 2 in Tesla Motors Inc (NASDAQ: TSLA ) autos.

The upside for AMD is that it also operates in growing areas of the market.

It has sold chips to Microsoft Corporation (NASDAQ:MSFT) for its Xbox and Sony Corp (ADR) (NYSE: SNE ) for its PlayStation, but is well behind Nvidia in gaming.

Advanced Micro Devices Lags Intel Badly

Advanced Micro Devices says it is also a “strong No.2 in computing”, but has struggled for years to successfully compete against industry titan Intel Corporation (NASDAQ: INTC ). Intel is expected to report sales of around $59 billion this year. AMD stock will log just over $4 billion in sales, making it about 7% the size of Intel.

Advanced Micro Devices has lagged Intel for years now. The race was much closer around 2000, but Intel has moved forward and AMD stock has not. Obviously, Intel is much larger and can easily outspend Advanced Micro Devices in research and development. Last year, Intel invested $12.1 billion in R&D, qualifying it as one of the largest spenders on R&D in the world. AMD spent less than $1 billion, and its annual R&D spend has fallen in recent years.

Advanced Micro Devices is said to be at least a couple of years behind Intel in terms of technology. AMD is just rolling out 14-nanometer chips while Intel has had the technology for a couple of years now. Advanced Micro Devices also doesn’t have the strength to produce its own chips any longer. Instead, it has to pay outside parties to do so, which increases costs.

The market share differential says it all. Intel’s computing market share is nearly 88%, while AMD’s is only 12%. Intel has also been increasing its share recently.

Bottom Line on AMD Stock

After enough analysis, I usually find something positive to say about a company’s future prospects. But with AMD stock, other than turnaround potential, I am really hard pressed to find a compelling investment story.

There is of course always some hope for Advanced Micro Devices. The rollout of the 14-nanometer chips gives AMD a better chance to compete with Intel. Its gaming business should continue to do well and grow, though again Nvidia is currently the stronger rival. There is also the potential for a development breakthrough to leap frog archrivals. But again, its R&D spend is woeful compared to either Intel or NVDA.

Finally, there is the potential for Advanced Micro Devices to be bought out by its rivals. It’s difficult to value the firm given it doesn’t generate much for profits or cash flow. AMD stock sells at a price-to-sales ratio of 2.6x, which is ahead of the market average of 2, but well below Intel’s ratio of 3x. Nvidia’s ratio is currently off the charts at 9.4x, but does indicate either rival could pick up Advanced Micro Devices on the cheap.

I would take a pass on AMD stock, but it remains a solid candidate to track the developments in chip gaming and computing.

As of this writing, Ryan Fuhrmann did not hold a position in any of the aforementioned securities.

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