Investors may want to consider shifting from Nvidia to Intel for potential growth and value
From Nasdaq: 2024-12-06 21:35:07
Nvidia’s stock has surged over 180% this year, valuing the company at $3.4 trillion. Intel, on the other hand, has seen its stock drop by 50% with a market cap of $100 billion. Investors may want to consider shifting positions from Nvidia to Intel due to potential changes in the semiconductor market.
Nvidia’s growth may slow as AI model development shifts towards smaller, specialized models, reducing the demand for its high-powered GPUs. Companies may become more cost-conscious and seek alternatives to Nvidia’s offerings, potentially impacting the company’s margins. Rivals like AMD and Intel could gain market share in the inference chip space.
Intel’s foundry business is poised for a turnaround with its new 18A process node, securing contracts with major players like Amazon and Microsoft. As Intel executes this transition successfully, the narrative around its foundry business could change. With potential policy changes under a new administration, Intel’s U.S. manufacturing footprint could become more valuable.
Intel stock offers a better risk-adjusted return, trading at a reasonable valuation of 23x consensus 2025 earnings. If earnings recover to historical levels, the stock could follow suit. With expectations of revenue growth in 2024 and tailwinds in the chip and foundry business, Intel may present a compelling investment opportunity. Intel is set for a rebound with new CPU chips like Lunar Lake and Arrow Lake, targeting PC and server markets. Gaudi 2 and Gaudi 3 AI accelerators could boost Intel’s presence in AI processors. In contrast, Nvidia’s high valuation at 48x FY’25 earnings poses risks to future growth and margins, potentially benefiting Intel investors.
In terms of returns, Nvidia has shown 2% MTD, 184% YTD, and 5255% cumulative total since 2017. Comparatively, the S&P 500 has 0%, 27%, and 170% returns, while Trefis’ Reinforced Value Portfolio has 1%, 26%, and 833% returns over the same period. Investing with Trefis may offer better risk-adjusted returns in the semiconductor market.
Read more at Nasdaq: Intel Stock A Better Pick Than Nvidia?