Nvidia vs Intel: Best AI Stock for Long-Term Investors

Published Date : 5/9/2025 

Explore the AI landscape and decide which stock is the better investment: Nvidia or Intel. Both companies have unique strengths, but only one stands out for long-term growth. 

The artificial intelligence (AI) market is booming, and investors are eager to find the best stocks to capitalize on this trend. Two prominent players in this space are Nvidia and Intel. While Nvidia has established itself as the leader in AI-specific hardware, Intel is making a comeback with government support. But which stock is the better investment for long-term growth?

Nvidia's GPUs are the industry standard for AI computing. The company's CUDA parallel computing platform allows developers to write code and build applications on Nvidia GPUs, making them highly efficient for AI tasks. Every GPU is a parallel processor, capable of performing thousands of operations simultaneously. This parallel processing capability is crucial for training large language models, generative AI, and other advanced applications.

Nvidia's Hopper GPUs were once the gold standard, but the company has now launched its Blackwell architecture, which offers even faster performance with lower power consumption. Blackwell sales have been impressive, generating $11 billion in the first quarter they were available and growing to $27 billion in the following quarter. In the most recent quarter, Blackwell sales reached $31.6 billion, accounting for 76% of Nvidia's data center sales. CEO Jensen Huang described the demand for Blackwell GPUs as 'extraordinary.'

On the other hand, Intel is the market leader in data center central processing units (CPUs), but it faces significant challenges from rivals like Advanced Micro Devices (AMD) and Arm Holdings. Analysts predict that Intel's market share will slip to 55% this year, with AMD's market share rising to 36%. By 2027, Intel's market share is expected to fall below 50%, with AMD capturing about 40% and Arm holding between 10% and 12% of the market.

Intel has also been attempting to build up its third-party foundry business, but this unit has struggled. Taiwan Semiconductor Manufacturing (TSMC) remains the dominant player in chip fabrication, and Intel has had difficulty attracting clients. The company has announced plans to build chip foundries in Arizona and Ohio, with the next plant expected to open this year in Arizona. Despite these efforts, Intel's foundry business has not yet gained the traction it needs to compete effectively.

Recently, the U.S. government has taken a 10% stake in Intel, which could provide a significant boost to the company. The Trump administration's investment of 433.3 million shares, along with a five-year warrant for an additional 5% of shares, is part of a broader strategy to encourage the development and manufacturing of high-end semiconductors in the U.S. This move has led some investors to speculate that Intel could be hitting a bottom and might be a good buy at its current price.

However, Intel's stock has already priced in high expectations. Its forward price-to-earnings (P/E) ratio has surged to nearly 200, while Nvidia's P/E ratio is a more reasonable 38. This multiple suggests that the market is betting heavily on the government's ability to push Intel to success. Analysts remain skeptical, with many projecting significant downside for Intel's stock. Bernstein's Stacy Rasgon has a $21 12-month price target, which would amount to a 12% downside, while TD Cowen's Joshua Buchalter has a $20 price target.

Intel has reported a net loss of $21 billion over the past four quarters, and it's unclear how the company will turn its finances around quickly enough to justify its current valuation. While the government's backing is a positive factor, it may not be enough to overcome Intel's challenges in the AI market.

In conclusion, while Intel's government support provides a potential tailwind, Nvidia's leadership in GPUs, its CUDA platform, and its strong AI infrastructure make it a safer and more attractive bet for long-term investors. Nvidia's proven track record and robust financial health position it well to continue dominating the AI landscape. 

Frequently Asked Questions (FAQS): 

Q: What is the main advantage of Nvidia's GPUs in the AI market?

A: Nvidia's GPUs are the industry standard for AI computing due to their parallel processing capabilities and the CUDA platform, which allows developers to write code and build applications efficiently.

Q: How has Intel's market share in data center CPUs been affected by competition?

A: Intel's market share in data center CPUs has been declining due to competition from AMD and Arm Holdings. Analysts predict that Intel's share will slip to 55% this year and fall below 50% by 2027.

Q: What recent government action has impacted Intel?

A: The U.S. government has taken a 10% stake in Intel, which includes 433.3 million shares and a five-year warrant for an additional 5% of shares. This investment is part of a strategy to encourage domestic semiconductor manufacturing.

Q: Why is Nvidia's forward P/E ratio more favorable than Intel's?

A: Nvidia's forward P/E ratio is more reasonable at 38, while Intel's has surged to nearly 200. This suggests that Nvidia's stock is less overvalued and more attractive for long-term investors.

Q: What challenges does Intel face in the AI market?

A: Intel faces challenges from competitors in the data center CPU market and struggles with its foundry business. The company has also reported significant financial losses, making it a riskier investment compared to Nvidia. 

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