AMD’s chips are often found in low-cost PCs, which means executives can’t get a true sense of fourth-quarter sales until after Black Friday. Image: AMD

Based on Intel’s dramatic sales warning Wednesday, you might expect rival Advanced Micro Devices to just crawl into a hole and die. If the economic mess is tripping up the most powerful chip company on the planet, how could its underdog challenger stand a chance?

Indeed, investors think that when Intel (INTC) sneezes, AMD (AMD) gets the flu. After Intel predicted fourth quarter sales will come in about $1.5 billion below its previous forecast, AMD shares plunged as much as 9% in midday trading Thursday before a broad market rally sent shares up 5% for the day. Intel shares, by way of comparison, were down only 5% midday and finished up up nearly 7%.

The pessimism about AMD does make some sense. While Intel has more than $12 billion in the bank, 80% share in PC chips, and a recent record of thumping AMD in the marketplace, AMD has been losing money. In a tough environment, you bet on the healthier company.

Or maybe not. Take a closer look at AMD and Intel, and it’s not quite that simple.

For starters, there’s a good reason why AMD isn’t lowering its sales guidance quite yet. Chief Financial Officer Bob Rivet told financial analysts Thursday that rather than echo Intel’s warning, he will give an update the week after Thanksgiving.

Why wait? Because of Black Friday, the biggest shopping day of the year. Bargain-hunting consumers are AMD’s core audience, while Intel does far better with higher-end consumers and businesses. Holiday buying will surely take a hit this year – a survey from Accenture shows that 40% of U.S. consumers plan to spend less this year than last. But if enough coupon clippers show up on Nov. 28 to buy cheap PCs, AMD could get a boost. Veteran chip analyst Nathan Brookwood of Insight 64 said the poor economy might help AMD gain share.

Of course, AMD-powered bargain PCs still won’t be the most eye-catching deal at retail. That honor will go to netbooks, a new breed of lightweight mini-laptops that are good for Web surfing and word processing, and that tend to come with Intel’s low-cost Atom processor inside. Though we could easily see netbooks selling for less than $199 this holiday season, AMD is hoping that their limitations will tempt buyers to trade up to a fuller-featured PC. (Don’t even think about listening to a CD, watching high-def streaming video, or playing anything more exciting than Solitaire on a netbook. They can’t handle it.)

Even with the netbook challenge, AMD has reason for hope. Its stock has been doing so poorly – it’s down more than 90% from its high three years ago — that even mediocre sales performance will seem like a huge victory. After its recent layoffs and a planned spinoff of its manufacturing operations, AMD’s balance sheet numbers are friendlier: Executives say that if AMD can manage more than $1.5 billion in sales — 15% less than last year — it can claim a profit.

Believe it or not, AMD might pull this off. Its latest graphics chip is taking share from rival Nvidia (NVDA). Its new server chip, code-named Shanghai, is getting positive reviews. If bargain-hunting PC buyers show up even in modest numbers, AMD has a fighting chance. (To make the best of it, AMD chief marketing officer Nigel Dessau tells me he’s actually spending more this year to school U.S. and European retail workers on the benefits of AMD technology.)

This is certainly no time for unbridled optimism, and AMD has proven it can fumble even in good times. But it has an extraordinarily low bar to step over. Intel expects fourth quarter sales to come in about 15 percent below last year, and it’s a disaster. If AMD turns in roughly the same performance, it will be cause for celebration.