St. James Investment Company identified a strategic pivot by Advanced Micro Devices, Inc. (NASDAQ: AMD) as the primary mechanism for challenging Intel's market dominance in its third-quarter 2026 investor letter. The fund’s analysis highlights how the semiconductor designer’s decision to abandon in-house manufacturing allowed it to compete against a rival with significantly higher capital resources.
The value-investing firm detailed that AMD’s response to competitive pressure began in 2008 when it adopted a "fabless" business model. St. James noted that because AMD could not match Intel's capital spending on fabrication facilities, it spun off its factories and subsequently staked its future on a clean-sheet architecture known as Zen. This architecture is manufactured at the facilities of TSMC, an external manufacturing partner that produces AMD’s chips for personal computers and data centers.
This structural shift occurs against a backdrop of shifting market dynamics described by St. James as increasingly challenging for value investing. The letter points to rising interest rates, energy prices, record government debt, and elevated stock-market valuations, even as the S&P 500 remains near all-time highs. The firm observes that U.S. equities have outperformed bonds since the pandemic, with stocks beating bonds by an average of 28% annually. Consequently, U.S. households now hold 52% of their financial assets in equities.
St. James argues that rising oil prices and long-term Treasury yields are increasing the risk of inflation and stagflation. The letter cites the 10-year Treasury yield at 5.23% and the 30-year yield at 5.55%, both reflecting substantially higher borrowing costs. In this environment, the firm remains cautious about AI-driven market narratives, advising investors to focus on businesses with durable competitive moats and valuations that provide a sufficient discount to absorb unexpected risks.
Advanced Micro Devices, Inc. (NASDAQ: AMD) shares closed at approximately $620.68 per share on October 9, 2026, valuing the company at a market capitalization of about $992.71 billion. Over the preceding month, the stock returned 23.24%, with trading levels ranging from $188.22 to $658.52 over the last 52 weeks. According to database records, 164 hedge fund portfolios held AMD stock at the end of the second quarter, an increase from 134 portfolios in the previous quarter.
While St. James highlights the strategic logic behind AMD’s fabless model, other market analyses present different perspectives on the company's current trajectory. One separate report described AMD as facing a problem of being "no longer in demand," while noting that Lisa Su’s recent moves have drawn attention. Other investors have expressed conviction that some AI stocks hold greater promise for delivering higher returns within a shorter timeframe than AMD.