Nvidia vs Intel Stock: Which Is Best?

Nvidia vs Intel Stock: Internet connectivity is being integrated into everything from refrigerators to automobiles, and every one of those devices relies on computer chips. As a result, many investors assume that semiconductor chip manufacturers are seeing high demand, rapid growth, and massive profits – the ingredients necessary for share prices to go up.

However, a series of logistical and economic challenges have actually pushed chip company stocks down quite a bit since the start of the year. Why are chip stocks falling? More importantly, will semiconductor stocks go up?

Why Are Semiconductor Stocks Down?

Most tech-focused companies have had a tough year, and the decline in their collective stock prices has been devastating to the Nasdaq Composite Index.

Year-to-date, the Nasdaq is down nearly 28 percent, primarily because tech companies are heavily represented on the Nasdaq exchange. The Philadelphia Semiconductor Index, which is limited to chipmakers like Intel and Nvidia, is down even more – almost 40 percent in 2022.

Tech companies, including chip manufacturers, saw tremendous growth during the pandemic years. The sudden transition to virtual work, learning, and socializing created unprecedented demand for digital infrastructure – both hardware and software. Related stocks saw a sharp rise in 2021, but that growth was unsustainable.

As COVID-19 restrictions eased and the danger subsided, consumers and businesses resumed some of their pre-pandemic habits. Tech company revenues dropped in 2022 when compared to the previous year. That spooked investors and started the tech selloff.

Next, inflation spiked, and the Federal Reserve signaled that it would respond by increasing interest rates. The mere suggestion of rising interest rates – and then the actual increases that followed – alarmed investors even more.

The combination of high inflation and high interest rates caused a decline in demand for costly tech devices and software, and tech company stocks dropped further.

Throughout this series of events, tech companies struggled with supply chain issues. Semiconductor manufacturers didn’t have critical components to meet high demand during the pandemic, which in turn delayed manufacturers of other devices.

The Russian invasion of Ukraine exacerbated the supply chain problem because Russia and Ukraine are responsible for a large percentage of the raw materials required for semiconductor production. For example, Ukraine controls roughly half of the global neon market, and Russia is a major producer of copper, aluminum, and nickel.

Most businesses have contingency plans to manage these sorts of risks, but the tech industry – semiconductor manufacturing in particular – wasn’t prepared for all of these challenges to occur at once. Investors saw the potential for a downturn in the tech market, and they sold off high-risk/higher-potential-growth tech stocks in favor of more stable alternatives.

As a result, semiconductor stocks lost considerable value in 2022. That includes major players like Nvidia and Intel. Specifically, Nvidia stock went down almost 60 percent year-to-date, and Intel stock declined by nearly 50 percent for the same period.

Market analysts and industry experts agree that tech stocks will recover and semiconductor stocks will go up over the next few years. The question really comes down to which company is most likely to go up more than its competitors. In other words, in a matchup between Nvidia vs. Intel stock, which is best?

Will Nvidia Stock Recover?

Nvidia is known for innovation. The company has successfully developed best-in-class graphics technology that is highly sought after by gamers who need powerful graphics processing units (GPUs). The chips are also popular among cryptocurrency miners, as they can complete complex computing tasks more quickly than competing products.

However, Nvidia products aren’t just for gamers and cryptocurrency miners. In fact, the company considers these applications incidental to its true mission. Nvidia’s goal is to solve the world’s most difficult problems through breakthroughs in machine learning and artificial intelligence (AI).

Nvidia’s advanced chips have facilitated new solutions for mitigating climate change, and they are being used to make autonomous vehicles a reality. In addition, Nvidia chips have become indispensable in medical research, where they have contributed to meaningful reductions in the amount of time it takes to bring new therapies to patients.

Because Nvidia is constantly working to improve its chip technology, it has been able to deliver steady growth for shareholders. Over the last ten years, earnings per share increased at a compounded rate of 32.3 percent, and the company had particularly impressive results during the pandemic.

Overall, industry experts and market analysts agree that Nvidia stock will recover over the next few years. Today’s comparatively low share price means, for those with a longer investment horizon, that it is a good time to buy Nvidia stock.

Will Intel Stock Go Up?

From a brand awareness perspective, Intel clearly outshines the competition. However, from a financial perspective, Intel’s woes began long before the pandemic.

Over the past five years, the Philadelphia Semiconductor Index more than doubled in value and Nvidia stock rose by almost 200 percent. Meanwhile, Intel stock went down more than 25 percent for the same period.

The consensus is that Intel needs a leader that has the skill to turn the company around. It may have found the right person in CEO Pat Gelsinger, who took the role in February 2021. Gelsinger has a long history with Intel, and he is making big moves to put the company back on top.

Among other initiatives, Intel is focused on domestic expansion. The company is increasing its US-based manufacturing facilities, and it has promised to create jobs for American workers. Intel is also working to get early access to next-generation chip manufacturing equipment, which suggests that it may have innovative designs in store for consumers.

Investors with limited risk tolerance who still want semiconductor stock in their portfolios are turning to Intel shares over the competition. Its large dividend yield of 5.31 percent offsets a lot of uncertainty. However, the balance of pros and cons could change if the dividend drops to free up cash to execute the turnaround plan.

Intel vs. Nvidia Stock: Which Is Best?

In a head-to-head matchup, the Intel vs. Nvidia question is a tough one. Intel has a number of advantages over Nvidia, including a lower price tag from a valuation perspective, as well as a higher dividend.

Intel is better established than Nvidia, and its well-rounded selection of products ensures reasonably stable demand. On the other hand, Nvidia has the skill and ability to grow quickly under the right conditions, and it is likely to exceed Intel’s growth once market conditions change.

The decision really comes down to individual investment goals rather than the companies themselves. Investors with a short investment horizon are better served with the safer option – Intel stock. Those who can remain committed through short-term volatility and maintain their position long-term may enjoy better returns if they buy Nvidia stock now.

#1 Stock For The Next 7 Days

When Financhill publishes its #1 stock, listen up. After all, the #1 stock is the cream of the crop, even when markets crash.

Financhill just revealed its top stock for investors right now... so there's no better time to claim your slice of the pie.

See The #1 Stock Now >>