Better Artificial Intelligence (AI) Stock: Intel vs. Nvidia
Semiconductor stocks have outperformed the broader market in 2023 thanks to the booming demand for chips deployed in artificial intelligence (AI) applications, which explains why the PHLX Semiconductor Sector index's gains of 45% this year are well ahead of the 17% appreciation in the S&P 500 index.
Not surprisingly, PHLX Semiconductor Sector index constituents Nvidia (NASDAQ: NVDA) and Intel (NASDAQ: INTC) also clocked solid gains. While Nvidia stock is up a massive 232% in 2023, Intel delivered relatively smaller gains of 38%.
Nvidia's terrific surge is a result of the pioneering role the company is playing in AI. Intel, meanwhile, is struggling on account of weak personal computer (PC) and data center sales, though it is trying to cut its teeth in the AI chip market. But can Intel really make a dent in Nvidia's AI supremacy and give investors a cheaper -- and better -- way to play the AI revolution? Let's find out.
Intel is just getting started in the AI chip race
Intel management spent a considerable amount of time discussing the company's AI strategy on its July earnings conference call. Chipzilla sees AI as one of the five key growth drivers for the broader semiconductor market through 2030. That's not surprising as the demand for AI chips is expected to grow at an annual pace of 29% through 2030, generating an annual revenue of $304 billion at the end of the forecast period.