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Will Intel stock recover and catch up with Nvidia? 

Will Intel stock recover and catch up with Nvidia? 
Elmaz Sabovic

In the midst of the artificial intelligence buzz, semiconductor stocks are soaring, with Nvidia (NASDAQ: NVDA) leading the charge with a valuation increase of over 60% since the beginning of 2024. However, one overlooked leader in the mix is Intel (NASDAQ: INTC), which previously dominated the industry.

Unfortunately, Intel is experiencing a rough patch, with its valuation dropping by 10% over the same period. What was once an industry dominated by Intel is now a fiercely competitive arena. Competitors have quickly adapted to the surging demand for artificial intelligence, leaving the unprepared in their wake.

This prompts the question of whether INTC stock will recover and eventually catch up with Nvidia while adding to its valuation in the process.

A head start for Nvidia that could put it too far for Intel

Nvidia’s extensive reign in GPUs afforded it a significant advantage in AI. While competitors like Intel and Advanced Micro Devices (NASDAQ: AMD) rushed to bridge the gap last year, Nvidia was primed to supply its chips to the burgeoning AI market without delay. 

This strategic positioning led to a remarkable surge in the company’s earnings and stock value. Nvidia made history as the first chipmaker to surpass a market cap of $2 trillion.

Nvidia, AMD, and Intel data center revenue growth YoY. Source: Digital Information World
Nvidia, AMD, and Intel data center revenue growth YoY. Source: Digital Information World

As chip sales soared, the company’s quarterly revenue, operating income, and data center revenue growth followed suit. This year, anticipation mounts for intensified competition in the AI GPU market, with Intel and AMD gearing up to launch their offerings later this year.

New offerings might help Intel carve out its slice of AI cake

Intel has faced some setbacks, but it’s a reminder of why maintaining a long-term outlook is crucial in investing, especially in emerging sectors like AI.

In December, Intel introduced a lineup of AI chips, including Gaudi3, a GPU aimed at challenging Nvidia and AMD’s offerings. The tech giant also unveiled new Core Ultra processors and Xeon server chips featuring neural processing units to enhance AI program performance.

Despite challenges, the promising Compound Annual Growth Rate (CAGR) of 37% in the AI market suggests that Intel doesn’t necessarily need to surpass Nvidia to establish a profitable presence in the sector. With the industry projected to exceed $1 trillion well before 2030, there’s ample opportunity for Intel to experience significant revenue growth.

The projected expansion of the AI technology sector. Source: Statista
The projected expansion of the AI technology sector. Source: Statista

The current demand in the sector is incredibly high, creating opportunities for more players beyond just Nvidia. This opens the door for Intel to bounce back, boost its revenue, and potentially challenge Nvidia’s dominance in the long term.

The final verdict on Intel stock price

While both NVDA (238.87%) and INTC (90%) stock experienced substantial growths in 2023, Nvidia continues to post record new highs, while INTC stock valuation is still down from its all-time high experienced way back in the early 2000s.

Regarding analyst sentiment, TradingView analysts aren’t particularly bullish on the future of INTC shares, assigning it a ‘neutral’ rating based on 45 evaluations. Among these, 8 suggested a ‘strong buy,’ two recommended a ‘buy,’ 28 indicated a ‘hold,’ 2 advised ‘sell,’ and five opted for a ‘strong sell’ recommendation for Intel shares.

The current average price target is $45.63, representing a 6.78% increase from Intel’s current stock price level.

INTC stock price target. Source: TradingView
INTC stock price target. Source: TradingView

However, the most optimistic forecasts reach as high as $68, indicating a potential 59% increase in the future.

Although Intel still holds significant potential, it appears unlikely that its valuation and stock will match up to Nvidia’s if the current situation persists. Nonetheless, given the swift growth of the AI sector, there’s ample opportunity for Intel to carve out its share in the market in the years ahead.

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