Nvidia Is Poised to Be Worth More Than Intel - MarketWatch skip to content

MarketWatch Site Logo A link that brings you back to the 澳门拉斯维加斯app下载homepage.

>

Move Over Intel. Nvidia Is Officially the Largest U.S. Chip Maker.

Argonne National Laboratory Installs NVIDIA DGX A100

Courtesy Argonne National Laboratory

In many ways the stock charts of rival chip makers Intel and Nvidia’s resemble their flagship products. As Intel’s central processing unit performance has plateaued, so has its stock price.

Nvidia’s (ticker: NVDA) chips, once known for powering videogame graphics, are getting more powerful—and the company has, for the first time, overtaken Intel as the largest U.S. semiconductor maker by market value.

Through Wednesday’s close, Nvidia was valued at $251 billion, or roughly $3 billion more than Intel, which closed with a market capitalization of $248 billion. Nvidia shares advanced 3.5% to $408.64 Wednesday, as Intel stock climbed 0.5% to close at $58.61.

What’s likely to continue to propel Nvidia past Intel (INTC) isn’t videogames, it will be its data center sales. As Barron’s has recently written, that segment of the company includes the sale of chips designed for artificial intelligence—which are technically similar to the chips it makes for videogame graphics.

Analysts project that the company’s data center revenue will begin to exceed its gaming sales for the company’s fiscal second quarter ending in July. Analyst models predict full-year data center sales of $6.5 billion compared with videogame sales of $6.1 billion.

Investors have recognized Nvidia’s potential, bidding it up to 46.9 times forward earnings. That is just behind rival Advanced Micro Devices (AMD), which trades at 47.8 times earnings and makes videogame graphics chips that are suited for artificial intelligence applications.

Intel, on the other hand, is the second cheapest stock in the PHLX Semiconductor Index with a forward price to earnings ratio of 13.5. Goldman Sachs thinks it should be even cheaper.

In a client note Monday, analyst Toshiya Hari outlined a negative case for Intel shares, predicting that it would drop to $54 in the next year, which is roughly an 8% downside. Hari’s prior target price was $65.

Mainly, the analyst is concerned about personal-computer demand. As the Covid-19 pandemic spread around the world, demand for PCs surged, with people buying computers to work from 澳门拉斯维加斯app下载home or for remote learning for children, Hari wrote. “As such, we expect PC demand to be sub-seasonal” in the third and fourth quarters, “and for notebook CPU shipments to correct sharply following an extended period of ‘over-shipping.’ ”

Hari has additional reasons for the negative call on Intel: weaker enterprise spending, inefficient operational expenditures and declining market share—rival AMD’s chips are performing as well as Intel’s are and Apple (AAPL) decided to move to its own internally designed chips for some of its machines. The analyst also thinks that lower memory pricing, continued capital expenditures will hinder the stock’s growth.

Intel has been the largest U.S. chip company for the majority of the past 30 years—surpassed only on several days by Texas Instruments (TXN) during the dot com bubble of 1999 and 2000. Then again in late 2012 and mid-2014, Qualcomm’s (QCOM) market cap often exceeded Intel’s. Taiwan Semiconductor Manufacturing (TSM) remains the largest semiconductor company on the planet.

Nvidia shares have advanced 74% this year, as Intel stock declined 2.1%. The S&P 500 Index is down 1.9% in 2020.

Write to Max A. Cherney at max.cherney@barrons.com