Semiconductor stocks have captivated Wall Street over the past year as the artificial intelligence (AI) boom has caused a surge in demand for graphics processing units (GPUs). Powerful hardware is essential for training and running AI models. So as interest in AI has grown, so have semiconductor sales.
As a result, semiconductor stocks NVIDIA (NASDAQ: NVDA) and Intel (Nasdaq: INTC) Over the past year, analysts have been scrutinizing these companies for their potential growth in the AI space, with Nvidia making countless investors bullish, leading the way in AI chips and quickly becoming the go-to GPU supplier for many AI-driven companies.
Intel has taken a slow approach to AI, but its forays into manufacturing are gradually differentiating it from rival chipmakers as it prepares to become one of the largest semiconductor makers in the U.S. and Europe amid rising demand for chips.
Let's take a closer look at these two chipmakers to determine whether Intel or Nvidia is the better AI stock in June.
Intel
Intel's stock price has fallen substantially since 2021, dropping 46%. Macroeconomic headwinds, increased competition, and a lack of direction have led to significant financial losses and investors have begun to lose confidence in the tech giant. However, looking at recent trends, now may be the best time to invest as Intel is showing signs of recovery.
Last year, Intel announced it was shifting its business to a foundry model and would begin building chip factories across the United States. Taiwan Semiconductor Manufacturing Company is currently the world's largest semiconductor chip maker, controlling at least 60% of the market.
But rising tensions between China and Taiwan have forced technology companies to rethink their reliance on TSMC, with Intel taking advantage of the need for more manufacturing options to jump headfirst into the industry.
Starting a foundry business is expensive, which is why most companies choose to outsource their manufacturing. As a result, it will take time for Intel to recoup its investment. But the move could pay big dividends in the long run. In fact, the company believes the change could save it $8 billion to $10 billion by 2025, helping it achieve an adjusted profit margin of 60%.
Intel still has a long way to go before it can reclaim its top position in chips, but its expansion into manufacturing could position it to benefit from AI and technology tailwinds well into the future.
NVIDIA
Nvidia's shares have soared 192% over the past 12 months and 132% so far this year. The company's business has exploded with the AI boom, and its chips have become the gold standard for AI developers around the world.
NVIDIA has been a success in the industry, reporting record revenue quarters for several years. The tech giant announced its results for the first quarter of 2025 (ended April 2024) on May 22. Revenue for the period increased 262%, beating Wall Street expectations by more than $1.4 billion. Most of the growth was driven by the data center division, where revenue increased 427% due to a surge in AI GPU sales.
But NVIDIA's industry dominance doesn't mean it's lagging behind in AI development. On June 2, CEO Jensen Huang unveiled its latest AI chip architecture, Rubin, a more powerful version of the Blackwell platform announced in March.
Following the announcement, Nvidia's shares rose 5% on June 3. The company also committed to adhering to a “one-year cadence” for product releases, after previously adhering to a two-year cadence for chip updates.
Nvidia is on a promising growth trajectory in AI and is likely to maintain its market dominance for years to come.
Which is the better AI stock: Intel or Nvidia?
Intel and Nvidia are at very different stages in their AI journeys: Intel appears to be just getting started, while Nvidia has established itself firmly in the game and isn't likely to lose ground anytime soon.
As a result, the two companies' stock prices are trading at vastly different prices.
This chart compares the valuations of Intel and Nvidia using two useful metrics: forward price-to-earnings (P/E) and price-to-sales (P/S). For both metrics, a lower number means a higher value. As a result, the numbers above show that Intel's stock is trading at a discount to Nvidia's, with a significantly lower forward price-to-earnings and price-to-sales multiple. This data suggests that Intel may be a lower-risk, more fairly priced investment in AI.
So, while NVIDIA has a stronger position in AI, it may be worth betting on a higher-priced stock like Intel and holding for the long term as the company develops. Intel's AI business is still in its early stages, and its foundry model has a lot of potential, so there may be room for further growth in the coming years.
Should I invest $1,000 in Intel right now?
Before you buy Intel stock, consider the following:
of Motley Fool Stock Advisor The analyst team Top 10 Stocks Here are the stocks investors should buy right now: Intel isn't one of them. These 10 stocks have the potential to generate huge profits over the next few years.
Things to consider NVIDIA This list was created on April 15, 2005…If you invested $1,000 at the time of recommendation, That comes to $741,362.!*
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Dani Cook has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and has recommended buying Intel's January 2025 $45 calls and selling Intel's May 2024 $47 calls. The Motley Fool has a disclosure policy.
Best Artificial Intelligence Stocks: Intel vs NVIDIA was originally published by The Motley Fool.
