Nvidia first overtook industry giant Intel. After raising quotes at the last session, the capitalization of the first company amounted to $ 251.3 billion against $ 248.2 from the second. This is not the first time in history that Intel has lost market value. In the past 20 years, it has lost its title to the largest corporation in the industry twice in favor of Texas Instruments and periodically in favor of Qualcomm. But each time it was temporary, and as a result, at the total cost, Intel regained its first place. An exception was the race with Asian chip manufacturers. South Korean Samsung and Taiwanese Taiwan Semiconductor are still leaders in the global semiconductor industry, pushing Intel to third place in the world.
At first glance, this year Intel is openly losing ground to its competitors and the market as a whole. So, since January, Nvidia shares went up by 70%, the Nasdaq technology index by 17%, and the industry indicator PHLX Semiconductor Sector (includes shares of US semiconductor companies) by 11%. Intel against this background gives the result at the level of the broad S & P500 index – both lose 2-3% by January, not having had time to fully recover after the March fall. However, this is an incomplete picture. The weak dynamics of Intel is mainly due to the fact that the company is now in the development cycle of the expensive Tiger Lake architecture, on which the next generation of processors will be built. This led to a sharp increase in costs (from $ 2.4 billion for research last year to almost $ 3 billion this year), and this happened at a bad time for the market – during the pandemic and the breakdown of supply chains.
Fundamentally, Intel remains no less interesting than Nvidia, and in the short term even more promising. The main growth of Nvidia quotes is associated with expectations of sales growth of a new generation of game consoles from Microsoft and Sony. In the case of active sales this fall, the revenue of the graphics chip manufacturer will be about $ 15 billion. The scale of Intel’s business is much more impressive, this year it will earn $ 74 billion even in a quiet market, which is five times more than Nvidia. In this regard, the potential for further growth at Nvidia is very limited, its shares are already traded with a P / E coefficient of 45. Intel against its background looks much less expensive – only 12 in terms of P / E. At the current stock price of $ 59, it is able to rise this year to at least $ 63 (+ 7% increase). At the same time, Intel holds a dividend of 2.3%, which Nvidia does not have. So with the equal value of the two companies on the market, in reality they are not so equal.