Sell Nvidia, Buy Intel Stock?

Core Viewpoint - Nvidia has experienced significant growth due to the AI boom, with its stock rising over 180% this year and a valuation nearing $3.4 trillion, while Intel has struggled with a 50% decline in stock price and a market cap of $100 billion [1][2] Nvidia's Position in the AI Market - Nvidia's revenues are projected to increase from $27 billion in FY'23 to nearly $130 billion in FY'25, driven by high demand for its GPUs, which are essential for training AI models [2] - The demand for Nvidia's GPUs may be front-loaded, with future growth likely slowing as performance gains diminish and high-quality data for training becomes scarce [2][4] - The shift in AI-related chip demand from training to inference could allow competitors like AMD and Intel to gain market share, although Nvidia is expected to remain a leader in the inferencing space [3] Competitive Landscape and Challenges - Nvidia's net margins have exceeded 50% due to high demand, but as companies seek returns on investment, there may be pressure on margins [4] - Major customers like Google and Amazon are investing in their own AI chips, which could pose a risk to Nvidia's business [4] Intel's Potential for Recovery - Intel's foundry business has faced challenges, including a $7 billion operating loss in 2023, but it is positioned for a turnaround with its new 18A process node technology [5][6] - Contracts with major companies such as Amazon and Microsoft for custom chip designs using the 18A process could shift the narrative around Intel's foundry business [6] - The potential return of Donald Trump to the White House in 2025 may benefit Intel due to a focus on domestic manufacturing and favorable policies [7] Valuation and Future Outlook - Intel's stock trades at a valuation of 23x consensus 2025 earnings, which is considered reasonable compared to its historical earnings [8] - If Intel's earnings recover to historical levels, the stock could see significant upside, especially with expected revenue growth in 2024 [8] - In contrast, Nvidia's stock trades at a high valuation of 48x projected FY'25 earnings, leaving little room for error amid evolving market conditions [9]