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The Zacks Analyst Blog Highlights NVIDIA Advanced Micro Devices Intel and Arm Holdings
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For Immediate Release
Chicago, IL – September 3, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NVIDIA Corp. (NVDA - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) , Intel Corp. (INTC - Free Report) and Arm Holdings plc (ARM - Free Report) .
Here are highlights from Friday’s Analyst Blog:
The Best Chip Stock Post NVIDIA Earnings: NVDA, AMD or INTC?
Wall Street darling NVIDIA Corp. recently reported its fiscal second-quarter results, following which its shares dipped. Does this mean that NVIDIA has lost its sheen to arch-rivals Advanced Micro Devices, Inc. and Intel Corp. in the semiconductor space? Or, does it still have the potential to increase shareholders' wealth soon? Let's examine –
NVIDIA Stock – Earnings Top, Shares Drop
NVIDIA recently posted blowout second-quarter fiscal 2025 revenues and net income that easily surpassed analysts' estimates. For the quarter ending on July 28, 2024, earnings per share for the chipmaker came in at $0.68, up 11% from the prior quarter and up 152% year over year.
Total reported revenues were $30 billion, up 15% from the previous quarter and 122% from a year ago. Revenues of each segment, such as data center, gaming, professional visualization, and robotics were up from the previous quarter and year.
Strong demand for existing Hopper chips and shipping of next-generation Blackwell artificial intelligence (AI) chips to be launched later this year boosted NVIDIA's quarterly results.
However, despite such promising quarterly results, NVIDIA's shares dipped 6.4% in Thursday's trading and were 2.1% lower on Wednesday. This is because the performance expectations were much higher as the NVIDIA stock is currently the S&P 500's best performer this year.
Why You Shouldn't Sell NVIDIA Stock
The share price drop at the moment is just a blip for NVIDIA. This is because if we look at the broader picture, with the Federal Reserve all set to trim interest rates in the September policy meeting, NVIDIA's capital expenditure outlays on AI-related infrastructure are expected to increase.
AI is a growing field, with the industry expected to expand from $214.6 billion in the current year to $1,339.1 billion by 2030, per MarketsandMarkets.
While the Blackwell AI chip launch will give NVIDIA a competitive edge over its peers, its gaming graphic processing units (GPU) product line, GeForce, is expected to help NVIDIA penetrate the growing gaming market. NVIDIA's initiative to enter the industrial metaverse space with the help of Siemens is also a tailwind for the company.
Concerns with AMD Stock
Like NVIDIA, Advanced Micro Devices also makes semiconductors and is trying to enter the gaming space. However, NVIDIA is way ahead of Advanced Micro Devices, whose latest quarterly revenues were minuscule compared to that of NVIDIA. In the recently reported quarter, Advanced Micro Devices' total revenues increased just 9% from a year ago.
Advanced Micro Devices is investing heavily in AI, but unlike NVIDIA, they are late to the party. Any AI investment takes a long period to generate returns on the invested capital. Moreover, Advanced Micro Devices hasn't poured money into the necessary AI infrastructure, which can be an issue for the company in the long run.
Anyhow, Advanced Micro Devices is losing the competition with NVIDIA. Per data from Jon Peddie Research, Advanced Micro Devices' market shares in GPUs have fallen from 35% to 12% over the past decade, while NVIDIA's shares have risen from 65% to 88%.
INTC Stock – Stands No Chance in the Competition
While NVIDIA is in a league of its own, Intel is struggling to compete with Advanced Micro Devices, which has seen some progress in the production of high-performance processing machinery.
Intel is in dire straits after failing to progress in the foundry business. Intel failed to make the most of the ever-expanding AI applications industry, where most of its peers are doing reasonably well.
Intel's server and networking segment is also being disrupted by Arm Holdings plc. Many of ARM's designs in the micro server segment have been accepted by Intel's competitors. Intel's shares never fully recovered from the dot-com bubble burst and currently has a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
NVIDIA Stock – Fundamentals Much Stronger
NVIDIA has generated profits more proficiently than Advanced Micro Devices and Intel. This is because the NVIDIA stock has a return on equity (ROE) of 124.6%, while Advanced Micro Devices and Intel have an ROE of 6% and 1.8%, respectively. As a thumb rule, any reading above 20% is considered very good.
NVIDIA's net profit margin is 55%, way more than Advanced Micro Devices and Intel's 5.8% and 1.8%, respectively. Any reading above the threshold of 20% signifies the company has been able to keep operation costs under control and generate profit from sales. As a result, the $2.71 Zacks Consensus Estimate for NVIDIA's earnings per share is up 74.8% year over year.
NVIDIA Stock – Trading Above 200DMA
From a technical perspective, the NVIDIA stock has been constantly trading above its 200-day moving average (DMA) so far this year, indicating a long-term uptrend.
On the other hand, the prices of Advanced Micro Devices and Intel have fallen below the 200 DMA this year, a tell-tale sign of a persistent downtrend.
Strong Price Upside for NVIDIA Stock
With NVIDIA's shares exhibiting a bullish trend and the stock faring much better than Advanced Micro Devices and Intel in the AI space and beyond, notable brokers have increased the average short-term price target of NVDA by 13.5% from the stock's last closing price of $125.61. The analysts' highest price target is at $200.
Hence, despite the recent hiccups, investors should hang on to the NVIDIA stock more than Advanced Micro Devices and Intel, as AI is here to stay (read more: 2 AI Stocks That Can Be the Next NVIDIA).
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights NVIDIA Advanced Micro Devices Intel and Arm Holdings
For Immediate Release
Chicago, IL – September 3, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NVIDIA Corp. (NVDA - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) , Intel Corp. (INTC - Free Report) and Arm Holdings plc (ARM - Free Report) .
Here are highlights from Friday’s Analyst Blog:
The Best Chip Stock Post NVIDIA Earnings: NVDA, AMD or INTC?
Wall Street darling NVIDIA Corp. recently reported its fiscal second-quarter results, following which its shares dipped. Does this mean that NVIDIA has lost its sheen to arch-rivals Advanced Micro Devices, Inc. and Intel Corp. in the semiconductor space? Or, does it still have the potential to increase shareholders' wealth soon? Let's examine –
NVIDIA Stock – Earnings Top, Shares Drop
NVIDIA recently posted blowout second-quarter fiscal 2025 revenues and net income that easily surpassed analysts' estimates. For the quarter ending on July 28, 2024, earnings per share for the chipmaker came in at $0.68, up 11% from the prior quarter and up 152% year over year.
Total reported revenues were $30 billion, up 15% from the previous quarter and 122% from a year ago. Revenues of each segment, such as data center, gaming, professional visualization, and robotics were up from the previous quarter and year.
Strong demand for existing Hopper chips and shipping of next-generation Blackwell artificial intelligence (AI) chips to be launched later this year boosted NVIDIA's quarterly results.
However, despite such promising quarterly results, NVIDIA's shares dipped 6.4% in Thursday's trading and were 2.1% lower on Wednesday. This is because the performance expectations were much higher as the NVIDIA stock is currently the S&P 500's best performer this year.
Why You Shouldn't Sell NVIDIA Stock
The share price drop at the moment is just a blip for NVIDIA. This is because if we look at the broader picture, with the Federal Reserve all set to trim interest rates in the September policy meeting, NVIDIA's capital expenditure outlays on AI-related infrastructure are expected to increase.
AI is a growing field, with the industry expected to expand from $214.6 billion in the current year to $1,339.1 billion by 2030, per MarketsandMarkets.
While the Blackwell AI chip launch will give NVIDIA a competitive edge over its peers, its gaming graphic processing units (GPU) product line, GeForce, is expected to help NVIDIA penetrate the growing gaming market. NVIDIA's initiative to enter the industrial metaverse space with the help of Siemens is also a tailwind for the company.
Concerns with AMD Stock
Like NVIDIA, Advanced Micro Devices also makes semiconductors and is trying to enter the gaming space. However, NVIDIA is way ahead of Advanced Micro Devices, whose latest quarterly revenues were minuscule compared to that of NVIDIA. In the recently reported quarter, Advanced Micro Devices' total revenues increased just 9% from a year ago.
Advanced Micro Devices is investing heavily in AI, but unlike NVIDIA, they are late to the party. Any AI investment takes a long period to generate returns on the invested capital. Moreover, Advanced Micro Devices hasn't poured money into the necessary AI infrastructure, which can be an issue for the company in the long run.
Anyhow, Advanced Micro Devices is losing the competition with NVIDIA. Per data from Jon Peddie Research, Advanced Micro Devices' market shares in GPUs have fallen from 35% to 12% over the past decade, while NVIDIA's shares have risen from 65% to 88%.
INTC Stock – Stands No Chance in the Competition
While NVIDIA is in a league of its own, Intel is struggling to compete with Advanced Micro Devices, which has seen some progress in the production of high-performance processing machinery.
Intel is in dire straits after failing to progress in the foundry business. Intel failed to make the most of the ever-expanding AI applications industry, where most of its peers are doing reasonably well.
Intel's server and networking segment is also being disrupted by Arm Holdings plc. Many of ARM's designs in the micro server segment have been accepted by Intel's competitors. Intel's shares never fully recovered from the dot-com bubble burst and currently has a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
NVIDIA Stock – Fundamentals Much Stronger
NVIDIA has generated profits more proficiently than Advanced Micro Devices and Intel. This is because the NVIDIA stock has a return on equity (ROE) of 124.6%, while Advanced Micro Devices and Intel have an ROE of 6% and 1.8%, respectively. As a thumb rule, any reading above 20% is considered very good.
NVIDIA's net profit margin is 55%, way more than Advanced Micro Devices and Intel's 5.8% and 1.8%, respectively. Any reading above the threshold of 20% signifies the company has been able to keep operation costs under control and generate profit from sales. As a result, the $2.71 Zacks Consensus Estimate for NVIDIA's earnings per share is up 74.8% year over year.
NVIDIA Stock – Trading Above 200DMA
From a technical perspective, the NVIDIA stock has been constantly trading above its 200-day moving average (DMA) so far this year, indicating a long-term uptrend.
On the other hand, the prices of Advanced Micro Devices and Intel have fallen below the 200 DMA this year, a tell-tale sign of a persistent downtrend.
Strong Price Upside for NVIDIA Stock
With NVIDIA's shares exhibiting a bullish trend and the stock faring much better than Advanced Micro Devices and Intel in the AI space and beyond, notable brokers have increased the average short-term price target of NVDA by 13.5% from the stock's last closing price of $125.61. The analysts' highest price target is at $200.
Hence, despite the recent hiccups, investors should hang on to the NVIDIA stock more than Advanced Micro Devices and Intel, as AI is here to stay (read more: 2 AI Stocks That Can Be the Next NVIDIA).
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.