Better AI Stock: Nvidia vs. Intel

Chip companies have been the main beneficiaries of a recent artificial intelligence (AI) boom. The industry has exploded since November 2022, when OpenAI launched ChatGPT, an advanced chatbot made possible by high-performance chips like graphics processing units (GPUs).

As the leader in GPUs, Nvidia (NVDA -1.66%) has profited massively from the surge in demand for tokens. As I write this, its stock is up 642% since the start of last year, alongside rising earnings, as it has captured a majority share of the AI ​​GPU market. Nvidia could have a lot more to offer investors as the industry develops.

However, there’s also an argument to be made for investing in less established AI chip stock, such as Intel (INTC -3.33%)who might have room to run. The company has had a challenging few years, with its stock price down 60% since 2021. However, Intel is making moves that could secure a strong role in AI for the long term.

Let’s examine these tech giants and determine whether Nvidia or Intel is the best stock to invest in the AI ​​market.

Nvidia: Dominating one of the fastest growing industries

At the start of 2023, Nvidia’s market cap was $359 billion, and now it’s just under $3 trillion. The company has enjoyed significant gains as its GPUs have become the go-to for AI developers around the world.

Nvidia released its fiscal second quarter 2025 earnings last week, with revenue up 122% year over year. For the period, sales beat analysts’ expectations by more than $1 billion, while earnings per share topped by $0.04. Overall, it was an extremely positive quarter for Nvidia, which saw double- and triple-digit growth in each of its five segments. Its data center division, on its own, saw a 154% increase in revenue due to increased sales of AI GPUs.

However, the bright quarterly results did not do much to attract investors. Shares of Nvidia have fallen since the August 28 earnings release. Geopolitical concerns, economic uncertainty, doubts about Nvidia’s valuation and concern over delays in the launch of Nvidia’s Blackwell processors all played a role in driving the investor pullback. However, the company’s near-unparalleled dominance in AI and steady earnings growth will likely make this dip temporary. In the meantime, now could be an excellent opportunity to buy shares in one of the best-valued positions in recent months.

Nvidia’s free cash flow rose 167% over the past 12 months to $47 billion, massively outperforming its competitors. Nvidia has the brand power and financial resources to maintain its dominance in artificial intelligence and continue to push its technology forward, making it one of the most reliable ways to invest in the industry.

Intel: An uncertain future

After years of declining earnings and market share in the chip industry, Intel is a little worse for wear. The company’s quarterly revenue and operating income fell 33% and 119% over the past three years, with free cash flow down 162%. As a result, Intel is planting seeds across technology in an effort to reinvent itself.

INTC data by YCharts

In AI, the chipmaker unveiled several new AI-enabled chips to better compete with Nvidia and AMD. Meanwhile, Intel has made a considerable push into manufacturing, hoping to eventually become the world’s largest maker of AI chips. However, these ventures did not come cheap, hurting Intel’s financial position and profitability.

Intel shares jumped 9 percent on Aug. 30 when a Bloomberg report said the company was in early talks to split its chip design and manufacturing divisions. The move could give both sides a better opportunity to prosper, with Intel’s recent earnings indicating it may have bitten off more than it could chew.

Intel was once a king in the chip market, with leading market shares in processors and manufacturing. However, it has struggled to keep up with competitors over the past decade. Recently announced chips have shown promising progress, and future Ohio factories could lead to a lucrative role in AI chip production. However, it could take decades for Intel to deliver significant stock growth.

Is Nvidia or Intel the better stocks to invest in artificial intelligence?

Nvidia and Intel are at vastly different stages of their AI journey. Nvidia has secured a top spot with an estimated AI GPU market share of perhaps as high as 95%. Meanwhile, Intel has yet to see significant returns from its hefty investment in the industry. Intel may bounce back strongly in the long term, but its future is too uncertain for me to recommend its stock.

Alternatively, Nvidia has one of the most established positions in AI and the cash to continue to thrive in the industry.

Furthermore, the chart below shows that despite Intel’s low stock price in recent years, it still doesn’t offer much value. Nvidia’s lower price-to-earnings (P/E) ratio indicates that its stock is trading at a better value than Intel’s. Meanwhile, Nvidia’s much higher free cash flow highlights the reliability of its business, making its stock an easy way to invest in AI right now.

Data by YCharts