The success of Advances Micro Devices Inc. (NASDAQ:AMD) stock in 2016 was based on expectations for growth. The lack of success for AMD stock in 2017, despite growth and profits, have made it the chief battlefield stock of the chip sector in 2018.

Bulls and bears diverge wildly on what might happen next. Flaws in microprocessors from rival Intel Corporation (NASDAQ:INTC) have our Bret Kenwell expecting big things from AMD stock this year.  Luke Lango, however, thinks those flaws are also impacting AMD stock, putting a cloud over it.

Which is it? Buy or sell? Are you about to make a killing if you buy AMD, or get killed?

Everyone Faces Spectre

What has the chip market roiling are some recently discovered, but long-running problems in Intel chips called Meltdown and Spectre. The Meltdown bug is unique to Intel, but Spectre affects AMD as well.

As a result, shares of Intel have fallen since the start of the year while those of AMD are up 20%, opening for trade Jan. 22 at about $12.60 each. The fundamentals on both companies appear to have been lost in the process.

Intel stock, for instance, is presently selling for about 3.5 times its sales, AMD stock for just 2.5 times sales, but Intel makes money regularly, even paying a 27 cent per share dividend, while AMD barely breaks even.

Assuming AMD hits its estimated $1.4 billion in revenue for the December quarter, with 6 cents per share of earnings, it will have delivered about $5.2 billion in revenue on a market cap of $12.5 billion for all of 2017.

It will also have shown a profit for the year of three cents per share, and have a two-quarter winning streak on earnings, offering hopes for more profit in the future.

While there are software fixes available for Meltdown and Spectre, they do impact a computer’s performance. Hardware fixes may be years away, and will be expensive to create.

In the near term, this advantages Intel. AMD has, due to its smaller size, been slow to respond to the bugs, and a re-engineering of its chips could take some time.

Graphics Seem Key

Here’s something else for AMD stock bulls.

AMD doesn’t just compete with Intel in microprocessors. It also competes with Nvidia Corporation (NASDAQ:NVDA) in graphics, a much hotter market. In both competitions, AMD usually comes off second-best, but the graphics market’s current strength means that’s good enough.

AMD has about 27% of the graphics card market, and has recently been falling further behind Nvidia but it still growing as fast as it can, given its size. The market is so hot that Nvidia is trying to direct sales of its limited inventory, which should mean more sales to AMD as well.

Intel has only recently begun working on competitive graphics cards.

AMD may be second in graphics, but in the near term that is a good place to be.

The Bottom Line on AMD stock

AMD shares rose in 2016 because the long-term future looked better than the past, which was a continuous stream of losses.

Now, however, AMD is making money, while Intel and Nvidia are still gearing up. Now is where AMD must show a profit if it wants to have the cash needed for the next turn of the technology wheel.

AMD made some headway against its debt in 2017, but paying down debt means accepting lower earnings. Operating cash flow was poor through 2017, despite its improved bottom line performance.

AMD is like an athletic team whose top players are good but getting older. Its window for victory is narrowing, and it could be gone before today’s investors get a return.

Investors buy tomorrow, not today. Count me among the bears.

Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story.