Nvidia’s value edges past Intel’s for first time

Nvidia's A100 GPU is one reason the company has drawn attention from investors. On Wednesday, its market capitalization edged past Intel;s. (Nvidia)

Semiconductor stocks have performed well in the markets during the COVID-19 pandemic, but some have done really well.  One of them is Nvidia.

On Wednesday, Nvidia shares rose high enough in afternoon trading to put its market capitalization just above the level of Intel’s.  The event was called out by Reuters and others, partly because Intel is nearly five times bigger in revenues and decades older than Nvidia.

Nvidia passed its much bigger competitor when its stock hit a record $404 on Wednesday, making its market capitalization $248 million, just ahead of Intel’s value of $246 billion.

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By the market’s close on Wednesday, Nvidia stock rose to $406.40, and then opened Thursday at $415.64 and was still climbing an hour later.  At a recent low point on March 16, Nvidia stock was $196.40.

Investors carefully watch such moves partly because the last few months have been a roller coaster ride for stocks overall with energy and transportation getting hurt.  As a market segment, however,  semiconductors have done well, judging by the performance of the Philadelphia Semiconductor Index of 30 semiconductors.  That index has climbed by more than 50% since March 23.

Nvidia stock started a massive climb in 2016 as it expanded beyond graphics chips into datacenters, autos and artificial intelligence.   Intel also has climbed since 2016, but not as steeply.  In the past week, Intel stock has declined slightly from $59.19 to $58.23 at Thursday opening.

A more telling comparison is that Intel’s stock has lost almost 3% in 2020, but Nvidia’s has bolted ahead by 68%.  Nvidia shares are trading at 45 times expected earnings, while Intel’s trade at 12 times expected earnings.

Market capitalization matters to investors but it’s not the only measure of a big company that matters. Intel customers and partners also pay attention to Intel’s size in revenues and its global scope in designing and actually fabricating chips.  Like Nvidia, it operates in many categories and offers chips for AI, autos, data centers and PCs. 

Nvidia is expected to see a massive increase in revenue this fiscal year, by 34%, reaching $14.6 billion according to a Refinitiv forecast.  That is about one-fifth the 2020 sales of Intel, which are expected to reach $73.8 billion, an improvement of 2.5%. In 2019, Intel was the top revenue producer in chips, while Nvidia finished ninth.

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