Intel Corporation INTC and NVIDIA Corporation NVDA are two premier semiconductor firms focusing on AI (artificial intelligence) and advanced chip technologies. Intel, reportedly the world’s largest semiconductor company and primary supplier of microprocessors and chipsets, is gradually reducing its dependence on the PC-centric business by moving into data-centric businesses, such as AI and autonomous driving. The foundry operating model is a key component of the company’s strategy and is designed to reshape operational dynamics and drive greater transparency, accountability and focus on costs and efficiency.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, the company’s focus has evolved from PC graphics to AI-based solutions that support high-performance computing (HPC), gaming and virtual reality (VR) platforms. NVIDIA’s GPU success can be attributed to its parallel processing capabilities, supported by thousands of computing cores, which are essential for running deep learning algorithms. The company’s GPU platforms are playing a significant role in developing multi-billion-dollar end-markets, such as robotics and self-driving vehicles.
With growing AI proliferation in PCs, smartphones, automotive and IoT applications, both Intel and Nvidia are steadily advancing their semiconductor portfolio to bolster their competitive edge. Let us analyze in depth the competitive strengths and weaknesses of the companies to understand who is in a better position to maximize gains from the emerging market trends.
Intel is investing to expand its manufacturing capacity to accelerate its IDM 2.0 (Integrated Device Manufacturing) strategy. The company is making various decisions to gain a firmer footing in the expansive AI sector. Its latest Xeon 6 processors with Performance-cores (P-Cores) can support large AI workloads across diverse sectors. With industry-leading capabilities in AI processing, the Xeon 6 family delivers the industry’s best CPU for AI at a lower total cost of ownership.
Intel’s innovative AI solutions are set to benefit the broader semiconductor ecosystem by driving down costs, improving performance and fostering an open, scalable AI environment. It remains on track with its 5N4Y (five nodes in four years) program to regain transistor performance and power performance leadership by 2025. Intel Xeon platforms have reportedly set the benchmark in 5G cloud-native core with substantial performance and power-efficiency improvements, additional power-saving capabilities and easy-to-deploy software. This has triggered healthy demand trends from major telecom equipment manufacturers and independent software vendors to optimize and unleash proven power savings for a more sustainable future.
However, Intel derives a significant part of its revenues from China. As Washington tightens restrictions on high-tech exports to China, Beijing has intensified its push for self-sufficiency in critical industries. This shift poses a dual challenge for Intel, as it faces potential market restrictions and increased competition from domestic chipmakers. The company is also lagging behind in the GPU and AI front compared to peers such as NVIDIA and Advanced Micro Devices, Inc. AMD. Leading technology companies are reportedly piling up NVIDIA’s GPUs to build clusters of computers for their AI work, leading to exponential revenue growth.
Story Continues
NVIDIA is rapidly gaining traction in enterprise AI, expanding its market beyond cloud providers. Major companies across industries are integrating NVIDIA’s AI platforms to automate workflows, enhance productivity and improve decision-making. The company’s DGX Cloud AI infrastructure, which allows enterprises to train and deploy AI models at scale, has seen increased adoption. The expansion of CUDA software and AI frameworks strengthens NVIDIA’s ecosystem, making it the preferred choice for enterprises developing AI applications. With AI adoption expected to accelerate in 2025 and beyond, NVIDIA’s software and AI cloud solutions are a significant revenue driver.
In addition, the generative AI revolution continues to be a tailwind for NVIDIA. The company’s Hopper 200 and upcoming Blackwell GPUs are designed for training and inference of large language models, recommendation engines and generative AI applications. NVIDIA’s Blackwell Ultra GPUs, set for launch later in 2025, are expected to deliver up to 25x the token throughput for AI inference compared to Hopper 100, further solidifying its dominance in AI-driven computing. Additionally, AI adoption is spreading beyond cloud hyperscalers, with industries such as healthcare, automotive and robotics increasingly investing in AI-powered solutions. This diversification ensures NVIDIA continues to grow beyond its traditional customer base.
However, NVIDIA’s reliance on Taiwan Semiconductor Manufacturing Company for GPU production presents significant supply chain risks, particularly given the ongoing geopolitical tensions between China and Taiwan. Given the growing tension between the United States and China, further export restrictions on advanced AI chips could also limit NVIDIA’s ability to sell high-end GPUs in key markets like China, potentially hurting revenue growth. Moreover, competition is intensifying with AMD’s MI300 AI accelerators and Intel’s Gaudi AI chips gaining traction, offering cost-effective alternatives for enterprises looking to diversify away from NVIDIA’s high-priced GPUs.
The Zacks Consensus Estimate for Intel’s 2025 sales implies a year-over-year decline of 4.3%, while that of EPS indicates growth of 323.1%. The EPS estimates have been trending southward on average over the past 60 days.
Zacks Investment Research
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NVIDIA’s 2025 sales suggests year-over-year growth of 51.4%, while that for EPS implies a rise of 42.1%. The EPS estimates have been trending southward over the past 60 days.
Zacks Investment Research
Image Source: Zacks Investment Research
Over the past year, Intel has declined 31.1% against the industry’s growth of 17.6%. NVIDIA has gained 21.8% over the same period.
Zacks Investment Research
Image Source: Zacks Investment Research
Intel looks more attractive than NVIDIA from a valuation standpoint. Going by the price/sales ratio, Intel’s shares currently trade at 1.78 forward sales, significantly lower than 16.17 for NVIDIA.
Zacks Investment Research
Image Source: Zacks Investment Research
Intel and NVIDIA carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both companies expect their earnings to improve in 2025. However, Intel expects a decline in revenues contrary to that of NVIDIA. Over the years, NVIDIA has shown a steep revenue and EPS growth, while Intel has been facing a bumpy road with a downhill slope. With a healthy long-term earnings growth expectation of 28.2%, NVIDIA is relatively better placed than Intel (long-term earnings growth expectations of 10.5%), although the former is a bit expensive in terms of valuation metrics. Consequently, NVIDIA seems to be a better investment option at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
