Shares of Intel (NASDAQ: INTC) fell lower today even though there was no news on the stock.
Instead, the chip stock seemed to react poorly to a strong earnings report Nvidia (NASDAQ: NVDA), the leader in the artificial intelligence (AI) revolution, an area that Intel is keen to tap into. Additionally, Nvidia announced a 10-for-1 stock split, a move that some believe will result in the company being admitted to the stock market. Dow Jones Industrial Averagereplacing Intel, the only semiconductor company currently in the Dow Jones.
What Nvidia’s report means for Intel
There was no immediate impact on Intel from Nvidia’s update, but the report gives no indication that Intel is gaining any traction in the AI ​​GPU market with its new Gaudi3 accelerator.
Nvidia CEO Jensen Huang also pushed back on the idea that competition was becoming a threat to the company, arguing that performance in his company equates to the lowest total cost of ownership. He also touted other benefits of Nvidia, including that it lives in any cloud, making it attractive for developers to build on, as opposed to a system that creates a hyperscaler for itself. Finally, he argued that Nvidia is more than just a chipmaker: it builds AI factories, which is much more complicated.
Furthermore, with Nvidia’s stock split taking effect on June 10, the prospects of Nvidia replacing Intel in the Dow Jones appear very real. Intel has long been a laggard at this point, with a $128 billion market, which represents just 5% of Nvidia’s market cap. Nvidia is also the most valuable US stock not included in the Dow Jones.
What it means for Intel
It is unclear how meaningful Nvidia’s results are for Intel. Finally, Nvidia also noted that the data center market is huge and demand still exceeds supply, so Intel should be able to grab some market share with its AI GPUs.
However, the idea that Intel will pose a serious challenge to Nvidia in the GPU market seems foolish at this point, and Intel still has a lot to prove.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 relying on Intel and short May 2024 $47 relying on Intel. The Motley Fool has a disclosure policy.
Why Intel Stock Was Sliding Today was originally published by The Motley Fool
