Is It Time to Rotate From Nvidia Stock to Intel Stock?

Stock Market

Those who track me on Twitter (@leadlagreport) know I often use colorful language in describing Nvidia (NASDAQ:NVDA), a leading player in the graphics processing unit (GPU) market. NVDA stock has skyrocketed, with its market capitalization surpassing the $1 trillion milestone. Nvidia’s success is primarily attributed to the rapid growth and adoption of AI technologies, where its GPUs have become an industry standard. It’s also moving irrationally relative to valuations. But is there a chance that good old Intel (NASDAQ:INTC) could start grabbing attention from AI mania investors?

Sure, the price ratio of Intel to Nvidia has clearly been in a massive downtrend, but at some point, downtrends end.

A chart showing the price ratio of NVDA stock and INTC stock.

Source: Charts by TradingView

The INTC Stock Story

Intel, a giant in the CPU market, has had its fair share of challenges in recent years. The company has been grappling with fierce competition, manufacturing delays, and a shift in market preference toward GPUs for AI tasks. Despite these hurdles, Intel has embarked on a strategic pivot under new leadership and is striving to reclaim its position in the market.

Intel has shown signs of recovery, with its stock up nearly 30% year to date. Nothing to sneeze at but clearly not as meteoric as Nvidia. The company’s new chip for quantum computing, the restructuring of its AI roadmap, and a planned semiconductor plant in Poland have all contributed to this rebound.

Under the leadership of CEO Pat Gelsinger, Intel is making strategic moves to regain its footing in the semiconductor market. The company is ramping up its manufacturing capabilities, focusing on AI and GPU technologies, and exploring collaborations with other industry players. Intel’s recent positive test chip results and potential collaboration with Nvidia could signal a turnaround for the company.

Nvidia vs. Intel: How to Play

Nvidia holds a dominant position in the GPU market and is a leading player in the AI sector. These market segments are poised for rapid growth, boding well for Nvidia’s future. Intel, despite its challenges, remains a significant player in the CPU market. The company’s strategic pivot towards AI, GPU technologies, and manufacturing services could potentially drive its future growth. And to think that Intel can’t compete would be a mistake given it is seeing what we are all seeing around AI demand.

While Nvidia’s current dominance in the GPU and AI markets positions it strongly for the future, Intel’s strategic pivot and recent positive developments suggest potential for a comeback. And with Nvidia’s price-to-earnings ratio of 246x versus Intel’s 16.37, the relative valuation looks attractive if indeed Intel can be successful in playing in the AI space.

On the date of publication, Michael Gayed did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Michael A. Gayed is the Publisher of The Lead-Lag Report, and Portfolio Manager at Tidal Financial Group, an investment management company specializing in ETF-focused research, investment strategies and services designed for financial advisors, RIAs, family offices and investment managers.

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