Nvidia has reportedly reached a new breakthrough and become the most valuable U.S. chipmaker over Intel for the 1st time.
Following the industry milestone, the company’s share increased by 2.3% in trading on Wednesday, setting a record of $404. This has enabled the graphic component maker to register a market cap of $248 billion, as compared to a $246 billion market value of Intel.
Nvidia has reportedly maintained a robust performance in terms of stock in the recent past. It has expanded its core business in personal computer chips to AI, automobiles, and datacenters. Intel had been a leading provider of processors for servers and PCs for decades. However, it came across critical downfall and issues in the smartphone revolution.
Since 23rd March 2020 when the S&P 500 suffered the worst decline, the chipmakers in the United States have mostly been outperforming their businesses. For instance, Nvidia’s stock has surged by 68%. However, the stock of Intel was reduced by around 3% in 2020. According to experts, the ongoing trend of employees working remotely to curb the spread of coronavirus will considerably drive the datacenter business growth of Nvidia.
In recent years, there has been a greater competition faced by Intel from other foreign competitors. Currently, the company’s market cap is below the value of Taiwan Semiconductor Manufacturing Co. and Samsung Electronics. It also has recently suffered various setbacks in the supply chain due to the ongoing pandemic. Additionally, it has spent high costs in the development of its ‘Tiger Lake’ 10-nm processors.
Despite a rapid stock rise of Nvidia, however, the sales of the company’s products are relatively lower than that of Intel. The company’s share has reportedly increased by 34% to $14.6 billion for the fiscal year. Meanwhile, a surge in revenue share of Intel by 2.5% to $73.8 billion in 2020 is also anticipated. Nvidia shares are trading currently at 45x expected earnings, as compared to Intel’s, which is at 12x expected earnings.