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Chip stocks experienced a significant surge Thursday in the wake of Nvidia Corp.’s upbeat commentary on AI-fueled demand — with one notable exception.
Shares of Intel Corp.
INTC,
were down more than 5% in afternoon trading Thursday, leading Dow Jones Industrial Average
DJIA,
laggards by a wide margin, on a day when Nvidia Corp.’s
NVDA,
stock was up 26% and the PHLX Semiconductor Index
SOX,
was ahead 6%.
Read: Chip index heads for highest close in 13 months as Nvidia momentum lifts semiconductor stocks
Nvidia delivered a stratospheric beat on its quarterly revenue outlook Wednesday afternoon, with executives discussing how spending on artificial intelligence is already starting to drive sizable financial benefits for the company. That discussion has Wall Street thinking that many other chip makers will also be able to capitalize on the same wave of interest in the hot technology — shares of Monolithic Power Systems Inc.
MPWR,
Advanced Micro Devices Inc.
AMD,
and Taiwan Semiconductor Manufacturing Co.
2330,
TSM,
all joined Nvidia in gaining by double-digit percentages in Thursday’s session.
Intel, though, was a key outlier. Nvidia’s commentary seemed to make investors more worried that Intel is behind the curve on what some see as a massive technological revolution.
Nvidia CFO on record-breaking forecast: ‘The inflection point of AI is here’
Intel’s revenue and profits from central processing units look “even more at risk” after Nvidia’s report, while Intel doesn’t have “any real” competitive position in graphics processing units or generative-AI compute, wrote Mizuho’s Jordan Klein, a desk-based analyst associated with the company’s sales team and not its research arm.
Nvidia’s earnings call “will reinforce the negative view that [Intel] and all their CPU share is a major loser and share donor to GPU, ASICs and lower power ARM design chips on the way,” Klein added.
While Nvidia GPUs typically would run alongside CPUs from either Intel or AMD, Nvidia has been making inroads in CPUs. Chief Financial Officer Colette Kress said on Nvidia’s call that the company has seen “growing momentum for Grace with both CPU-only and CPU-GPU opportunities across AI and cloud and supercomputing applications.”
Read: ‘Ride the Nvidia wave.’ Wall Street says the ‘undeniably pricey’ stock can keep roaring.
Nvidia is perceived to be ahead of the pack in AI-related computing technology, but AMD is at least in a better position than Intel, with more of a one-stop shop across CPUs and GPUs. That’s likely why AMD’s stock is riding on Nvidia’s coattails Thursday, up more than 10% in afternoon action.
AMD is “the only other real GPU supplier,” Klein wrote, though the company “could lose CPU spend in process and [has] a far way to go to catch [Nvidia].”
In his view, it “will take some time for more advanced and higher performance GPU and software platform to ramp and really drive upside potential” at AMD. “But seeing how fast and much [Nvidia] benefited, few will want to wait and see how long that takes for AMD.”
A more clear beneficiary, he noted, is Taiwan Semiconductor, whose stock was up more than 12% Thursday. You “cannot get any of these GPUs, inference, etc. without their fabs,” according to Klein.
As for Intel, Klein likes that the company is approaching a second-quarter bottom and positioned to capitalize on a personal-computer refresh, but he said its stock “feels totally stuck at best and could get shorted.”
