Nvidia stock pulled ahead of Intel’s today for the first time, emerging with a $248 billion market cap against Intel’s $246 billion. That officially makes it the US’ most valuable chip maker and the third largest chip maker in the world, which is impressive for a company that can’t physically produce a single chip.
Unlike Intel, Nvidia is a fabless chip maker, meaning it designs chips but contracts out their actual production to third-party foundries like TSMC (which also happens to be the second largest chip maker in the world, just behind Samsung). Intel, meanwhile, owns its own fabs and handles creating chips entirely in house, from design to production. But clearly, that comes with its disadvantages.
There’s a number of reasons for the potential jump in Nvidia stock, with the explosion of AI workloads in the data center being chief among them. The 7nm Ampere GPU architecture, which speculators expect to be announced within the next couple of months and will relate to the Nvidia RTX 3080, is certainly another reason for the market's optimism. We've already seen leaks surrounding Nvidia's next-gen GPUs, so it's clear they're on the cusp of release.
Of course, market valuation only looks at the stock market, as opposed to total revenue. Intel still beats Nvidia on that front, with Reuters claiming that analysts see Nvidia’s revenue rising 34% this year to $14.6 billion as opposed to Intel’s projected rise of 2.5% to $73.8 billion.
That’s to be expected when pitting a GPU maker against a CPU maker- every computer needs a CPU, whereas GPUs are sometimes optional depending on the task. Still, Nvidia boasts a higher revenue growth rate than Intel, and with a 68% stock growth rate this year vs Intel’s 3%, it’s clear that the GPU-maker is growing faster than Intel overall. Reuters attributes this to data center demand following the global pandemic.
Nvidia's accelerated growth rate is also great news for TSMC, which is currently battling with the US to keep Huawei as a client and is also looking to build an Arizona fab starting next year. A larger Nvidia means more potential business for them should they need to quickly fill a vacancy.
Building all your parts yourself gives you greater control. But the market shows that, sometimes, it’s worth sacrificing that control for more flexibility.
