One of the central premises in investing these days–one espoused by a surprising number of analysts–is that Intel (NASDAQ:INTC) can come back to ultimately beat Nvidia (NASDAQ:NVDA). That might sound like a bridge too far, especially given the comparative statuses of Intel and Nvidia in the field. Despite the shifting faith of several analysts, there is a way for Nvidia to win here and maintain its rankings at the top of the heap. So, let’s have a look at a battle plan that might not just give Nvidia an edge but let it keep the one it already has.
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Foundry Dreams
One of the biggest reasons why analysts are putting their faith in Intel is because it’s increasingly putting its efforts into becoming a chip foundry. In fact, not so long ago, we heard about Intel’s plans to make chips for Nvidia. If that remains the case, then Intel will have a piece of every chip provider, and thus find itself in the enviable position of selling shovels in a gold rush.
If Nvidia wants to keep its place in the lead, then it may do well to consider producing its own chips. Having a competitor serve as a supplier can be a problem and one that Nvidia could see coming. That supplier could ramp up prices or cut off the flow altogether. Given that Intel has recently been seen making advances in its chips and even its chip socketing (the process of installing chips in a socket that allows for easy removal), that could prove to be a substantial threat to Nvidia.
It’s safe to bet that Intel will want to preserve its standing in the field and provide a market for its own chips. Thus, Nvidia will have to be prepared to fend off the competitive risk represented by not only Intel but also others like AMD (NASDAQ:AMD).
Push the Use Cases
The good part about Nvidia’s product line is that it has a remarkable number of use cases. While it’s made a huge splash in artificial intelligence (AI) scenarios, Nvidia had plenty of uses before AI even really became a thing. It wasn’t so long ago, after all, that Nvidia was a big deal in mining cryptocurrency. And before that, it was the undisputed leader of PC gaming.
Even when AI started gearing up in earnest, Nvidia was still handling its other markets. For Nvidia to maintain its lead, it needs to run on all cylinders. It needs to continue to be a strong player in AI, but it also needs to keep up its presence in cryptocurrency and gaming. With all of those markets together, Nvidia stands the best chance of keeping its top standing.
Put Those Resources to Work
Nvidia’s recent run of success in the field has given it a remarkable surge in both equity and available resources. It was, for a while, the most valuable company on the planet by market cap, reaching $3.326 trillion and surpassing Microsoft (NASDAQ:MSFT), which came in at $3.323 trillion. With that kind of fiscal firepower to back it up, there’s very little it can’t do. It mustn’t be afraid to put those resources to work in terms of keeping its position.
Expanding its manufacturing base may be a good start here, along with marketing efforts geared toward calling attention to its multiple use cases. We just established that it needs to maintain its use cases anyway, and with the extra cash it’s got on hand, it can afford to keep up its marketing in multiple directions.
Is Nvidia a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 38 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 203.26% rally in its share price over the past year, the average NVDA price target of $135.81 per share implies 5.87% upside potential.
