The semiconductor sector is growing rapidly thanks to the rise of artificial intelligence (AI), making it a great area to invest in. The industry saw 19% year-over-year revenue growth to $627 billion in 2024, and is forecast to hit $981 billion by 2029.
Two giants of the industry to consider investing in are Intel (INTC +0.30%) and Nvidia (NVDA 4.43%). The former enjoyed decades of dominance in the PC arena. The latter flourished as its semiconductor chips proved popular for AI.
Reasons exist to buy shares in one or the other. But which might be the better semiconductor investment for the long haul? Here's a look at Intel and Nvidia to answer that question.
Intel's pros and cons
NASDAQ: INTC
Key Data Points
One factor making Intel a compelling investment is that its shares look undervalued. The stock's price-to-book (P/B) ratio was 0.87 at the time of writing, and this indicates shares are valued lower than Intel's assets.
The semiconductor veteran's bargain stock price is the result of a challenging 2024 fiscal year, which ended Dec. 28. Revenue for the year fell to $53.1 billion from $54.2 billion in the 2023 fiscal year. That's a disappointing result for a semiconductor giant amid the AI boom.
One reason for the sales drop was the poor performance of Intel's foundry business. While both Intel and Nvidia produce semiconductor chips, Intel owns foundries that manufacture its chips. Nvidia is a fabless chipmaker, meaning it outsources the fabrication of its semiconductor products.
Intel's fiscal 2024 foundry revenue dropped to $17.5 billion from $18.9 billion in 2023. At the same time, costs increased, and this double whammy squeezed Intel's gross margin, which dropped to 32.7% in fiscal 2024 compared to 40% in the prior year. As a result, the company exited fiscal 2024 with a net loss of $19.2 billion.
But not all is doom and gloom for Intel. The company has begun manufacturing chips for other companies. Microsoft and Amazon are among its customers as both seek to use custom chips to power their AI ambitions.
Outside its foundry business, Intel's semiconductor products saw 3% year-over-year revenue growth to $48.9 billion in fiscal 2024. Its latest PC chip, dubbed Panther Lake, debuts later this year, and that should boost Intel's product sales in fiscal 2025.
Reasons to consider Nvidia
NASDAQ: NVDA
Key Data Points
Nvidia may not manufacture its chips, but its leadership in AI chipset designs won over customers to the tune of $130.5 billion in revenue during its 2025 fiscal year, ended Jan. 26. This represented a 114% year-over-year increase.
Because it's not weighed down by the costs of running a foundry, Nvidia's gross margin was a strong 75% in fiscal 2025, up from 72.7% in the prior year. Consequently, net income increased 145% year over year to $72.9 billion.
Nvidia's financials are strong, and so is its latest AI tech. In March, the company unveiled the Blackwell Ultra platform. This product is so powerful, it enables AI to "explore different solutions to problems and break down complex requests into multiple steps, resulting in higher-quality responses," according to the company.
As a result, the Blackwell Ultra brings AI systems closer to mimicking human thinking, going beyond simply identifying patterns in data to contemplating what the best answer to a problem might be. This advancement ushers in what's referred to as the age of AI reasoning, the next evolution of artificial intelligence.
To meet this higher level of AI aptitude, companies require more powerful computing capabilities. That's where Blackwell Ultra comes in. Tech titans, including Microsoft and Amazon, already are adopting Blackwell Ultra.
Picking between Intel and Nvidia
In weighing Intel against Nvidia, the former's stock looks like a bargain, but its business performance is underwhelming. For instance, Intel estimates between $11.7 billion and $12.7 billion in fiscal first-quarter revenue. The company generated $12.7 billion in the prior year, so Intel doesn't expect sales growth this Q1.
Meanwhile, Nvidia anticipates its strong growth streak to continue this year. Fiscal Q1 sales are expected to hit $43 billion, a 65% increase over the previous year's $26 billion.
In addition, recent stock market volatility pushed down Nvidia's share price, which made its valuation more attractive. Here's a look at the price-to-sales (P/S) ratio for both companies to assess their stock valuations.
Data by YCharts.
Nvidia's P/S ratio hovers near a low point for the past year. Intel's P/S multiple is far below its rival's, but its poor business performance doesn't warrant a high valuation.
Intel could become a turnaround story. The company brought on a new CEO, Lip-Bu Tan, in March. But even if Tan pulls off the turnaround that's eluded Intel under previous leadership, it could take years.
In contrast, Nvidia is firing on all cylinders, and its Blackwell architecture looks to fuel more growth as AI tech evolves. For these reasons, Nvidia is the superior semiconductor stock to invest in for the long term.
