Nvidia or Intel: Top Analyst Picks the Best AI Chip Stock to Buy

Chip stocks have been in the spotlight for a while now, and that’s not surprising considering how important the sector is to the current biggest trend – AI.

However, not all semiconductor stocks have enjoyed the AI-fueled bull run, with some names trouncing the broader markets and others seriously lagging.

Meanwhile, a look at the state of the industry also shows that not all companies are thriving to the same extent. That is a conclusion reached by KeyBanc’s John Vinh, an analyst ranked amongst the top 2% of Street stock specialists, who says his “quarterly supply chain findings were mixed.”

As such, Vinh has been reassessing the prospects of several companies operating in the space, amongst them industry giants Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC), and has decided one offers a much better opportunity than the other.

By using Vinh’s insights we can gain a better understanding of how both are currently positioned. For added color, we’ve also opened the TipRanks database to find out whether the rest of the Street’s analysts have a similar view. Let’s dive in.

Nvidia

Any current conversation on the state of the chip industry will not be complete without a mention of Nvidia. The semi colossus was hardly a minnow before the AI opportunity presented itself, as it was a well-known maker of GPUs, primarily aimed at the gaming market. But the new AI-driven paradigm has lifted the company to the environs of the world’s most valuable companies. In fact, barring Apple, Nvidia’s $3.25 trillion market cap is the world’s largest.

While its products are based on revolutionary designs and rigorous scientific development, in contrast, explaining Nvidia’s rise to the top is quite uncomplicated. In short, it simply makes the best AI chips out there, to such an extent that it commands about 80% share of the market.

The Street was at first shocked by the huge strides made by the company on the back of the soaring demand for its products, but excellent quarterly showings have now become almost de rigueur. 

The most recent report, for FQ2, was no different. Revenue grew by 122.4% year-over-year to reach $30.04 billion, in turn beating the Street’s forecast by $1.31 billion. At the other end of the equation, adj. EPS of $0.68 outpaced consensus by $0.04. And moving forward, FQ3 revenue is anticipated to hit $32.5 billion, plus or minus 2%, above the analysts’ forecast of $31.75 billion.

If the company’s performance has been hard to fault, recent production delays for its new Blackwell GPU architecture have provided a sour note and a niggling concern for investors.

However, following his recent checks, KeyBanc’s John Vinh strikes a positive tone and sees several reasons to back Nvidia, including: “1) not seeing any signs of further delays with Blackwell expected to ramp into mass production beginning in December and estimate Blackwell in F4Q (Jan) will contribute over $7B in revenues; 2) Hopper (H100/H200) demand remains very strong despite Blackwell ramping in F4Q, as we expect F4Q Hopper revenues to increase ~15% q/q; and 3) in 2025 GB200 mix remains 60- 70% NVL72, which projects to over $200B in data center revenues in 2025.”

“We see NVDA remains uniquely positioned to benefit from AI/ML secular data center growth within the industry,” the 5-star analyst went on to add. “With significant barriers to entry created by its CUDA software stack, we see limited competitive risks and expect NVDA to continue to dominate one of the fastest growing workloads in cloud and enterprise.”

These comments underpin Vinh’s Overweight (i.e., Buy) rating while his $180 price target factors in one-year growth of ~36%. (To watch Vinh’s track record, click here)

That’s hardly a controversial take on Wall Street given 39 other analysts join him in the bull camp, thoroughly outflanking 3 Holds and all culminating in a Strong Buy consensus rating. At $152.44, the average price target offers 12-month returns of ~15%. (See Nvidia stock forecast)

Intel

And now for something completely different. That is, we’ll still stay in the realm of chip stocks but while the Nvidia story is a triumphant one, at least for now, Intel’s one is a bit of a sad tale.

It’s all gone rather pear-shaped for this struggling chip giant and that has been down to the company mainly shooting itself in the foot. Product delays amidst manufacturing issues have led to lost market share, bad management and a lack of innovation have resulted in the company losing its edge over rivals, and Intel also remains badly positioned in the AI chip game.

While the company is now attempting to turn the ship around and has set its sights on once again becoming a force to be reckoned with in the industry, as was evident in its Q2 readout, the task at hand looks rather daunting.

The company generated revenue of $12.83 billion In the quarter, amounting to a 0.9% YoY drop and missing the prognosticators’ forecast by $150 million. At the bottom line, adj. EPS of $0.02 also fell shy of expectations – by $0.08.

That was bad enough, but the outlook was dire too with Q3 revenue expected in the range between $12.5 billion and $13.5 billion, some distance behind the $14.39 billion the analysts were looking for.

If that amounted to a warning from Intel that things won’t get better anytime soon, Vinh’s latest industry assessment seems to confirm the downbeat expectations.

“Our findings from Asia are negative,” says the analyst “including: 1) supply chain as well as our latest cloud tracker results indicate INTC is losing significant market share in servers to AMD, as Genoa instances increased over 200% m/m in September; 2) the ramp of Blackwell in 2025, particularly GB200, will be a headwind for INTC, as Intel today has high market share in NVDA HGX-based AI servers; 3) the lack of a cost-down AI CPU targeted at mass market AI PCs is likely to result in share loss for INTC next year, as Lunar Lake represents a premium solution; and 4) feedback on INTC’s AI chip Gaudi 3 has been disappointing with very little demand or interest from customers.”

Quantifying his stance, Vinh rates INTC shares as Sector Weight (i.e., Neutral) with a fair value of $22, a figure 5% below the current trading price.

Most of Vinh’s colleagues see his stance as the right one. Based on a mix of 26 Holds, 7 Sells, and 1 lone Buy, the stock claims a Hold consensus rating. The average target stands at $25.38, suggesting gains of 9% are in the cards for the coming year. (See INTC stock forecast)

For top-ranked analyst John Vinh, the verdict is clear: Nvidia is the superior chip stock to buy right now.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.