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 biggest trend right now – AI.

However, not all semiconductor stocks have enjoyed the AI-driven bull market, with some names outperforming the broader markets and others significantly lagging behind.

A look at the industry situation now shows that not all companies are doing equally well. That's the conclusion reached by KeyBanc's John Vinh, an analyst ranked in the top 2% of Street stock specialists, saying his “quarterly supply chain results were mixed.”

As a result, Vinh has reassessed the prospects of several companies operating in this space, including industry giants Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC), and concluded that one represents a much better opportunity than the other.

By leveraging Vinh's insights, we can better understand how both are currently positioned. For even more color, we also opened up the TipRanks database to see if the rest of the Street's analysts have a similar view. Let's dive in.

Nvidia

Any current conversation about the state of the chip industry would be incomplete without mentioning Nvidia. The Semi-Colossus was barely a minor before the AI ​​opportunity arose, as it was a well-known manufacturer of GPUs primarily aimed at the gaming market. But the new AI-driven paradigm has brought the company close to the most valuable companies in the world. Apart from Apple, Nvidia is actually the largest in the world with a market capitalization of $3.25 trillion.

While its products are based on revolutionary designs and rigorous scientific development, Nvidia's rise to the top is, in contrast, fairly straightforward to explain. In short, it simply makes the best AI chips on the market, to the extent that it has about 80% market share.

The Street was initially shocked by the tremendous progress the company was making due to increasing demand for its products, but excellent quarterly results have now become almost a given.

The recent report for FQ2 was no different. Revenue rose 122.4% year-over-year to $30.04 billion, beating the Street forecast by $1.31 billion. At the other end of the equation is Adj. Earnings per share came in at $0.68, beating consensus by $0.04. And going forward, third-quarter revenue is expected to reach $32.5 billion, plus or minus 2%, above analysts' forecast of $31.75 billion.

While the company's performance is hard to fault, recent production delays for its new Blackwell GPU architecture have left investors feeling guilty and concerned.

However, following his recent reviews, KeyBanc's John Vinh strikes a positive tone and sees several reasons to support Nvidia, including: “1) There are no signs of further delays, with Blackwell expected to begin mass production from December and Blackwell in F4Q is estimated.” (Jan) will contribute over $7 billion to sales; 2) Hopper demand (H100/H200) remains very strong despite Blackwell's increase in F4Q as we expect Hopper sales to increase by approximately 15% QoQ in F4Q. and 3) in 2025, the GB200 mix remains at 60-70% NVL72, representing data center revenue of over $200 billion in 2025.”

“We see that NVDA remains uniquely positioned to benefit from secular AI/ML data center growth in the industry,” the 5-star analyst added. “Given the significant barriers to entry created by the 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 support Vinh's Overweight (i.e. Buy) rating, while his $180 price target factors in one-year growth of ~36%. (To view Vinh's track record, click here)

That's hardly a controversial assessment from Wall Street, considering it's joined by 39 other analysts in the bull camp, significantly outpacing 3 Holds and all culminating in a Strong Buy consensus rating. At $152.44, the average price target provides a 12-month return of ~15%. (See Nvidia stock forecast)

Intel

And now for something completely different. That said, we're still in chip stock territory, but while Nvidia's story is a triumphant one, at least for now, Intel's is a somewhat sad story.

Things are going pretty wrong for this struggling chip giant, and that's mostly because the company has shot itself in the foot. Product delays due to manufacturing issues have led to loss of market share, poor management and lack of innovation have caused the company to lose its edge over competitors, and Intel also remains poorly positioned in the AI ​​chip space.

While the company is now trying to turn things around and aim to once again become a force to be reckoned with in the industry, as shown by its second-quarter results, the task ahead looks rather daunting.

The company posted revenue of $12.83 billion in the quarter, down 0.9% from a year earlier and missing forecasters' forecast by $150 million. Bottom line Adj. Earnings per share of $0.02 also fell short of expectations – by $0.08.

That was bad enough, but the outlook was also bleak, with third-quarter revenue expected to be between $12.5 billion and $13.5 billion, a little way short of the $14.39 billion analysts were expecting. Dollar lies.

If this amounts to a warning from Intel that things won't get better any time soon, Vinh's latest industry assessment appears to confirm the optimistic expectations.

“Our insights from Asia are negative,” says the analyst, “including: 1) the supply chain as well as our latest Cloud Tracker results suggest INTC is losing significant server market share to AMD as Genoa instances increase year-over-year have risen over 200%.” September; 2) The rise of Blackwell in 2025, especially GB200, will be a headwind for INTC as Intel has a high market share in NVDA HGX-based AI servers today; 3) The lack of a low-cost AI CPU targeting mass-market AI PCs is likely to result in a loss of share for INTC next year as Lunar Lake represents a premium solution; and 4) feedback on INTC’s Gaudi 3 AI chip was disappointing and customer demand/interest was very low.”

To quantify his stance, Vinh rates INTC shares as sector weighted (i.e. neutral) with a fair value of $22, which is 5% below the current trading price.

Most of Vinh's colleagues believe his stance is correct. Based on a mix of 26 Holds, 7 Sells and 1 individual Buy, the stock receives a consensus rating of Hold. The average target is $25.38, suggesting a 9% gain for the coming year. (See INTC Stock Prediction)

For senior analyst John Vinh, the verdict is clear: Nvidia is currently the best chip stock to buy.

To find good stock trading ideas at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' stock insights.

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