The Value vs Growth Dilemma for Intel, Nvidia and AMD

Another interesting look is a comparison of Intel and the peers as if AMD and Nvidia were one company. Intel would be valued at half the value of its two rivals in market cap, yet its $75 billion in revenues is still double what is expected from the combined revenues of AMD and Nvidia. Intel may not feel that the market is giving it a fair valuation, but the growth of AMD and Nvidia just has much more of a “wow factor” than the “no-growth to low-growth” of Intel, and Intel’s 2.7% dividend yield just isn’t going to change the mind of a growth investor at this time.

Intel’s analyst community pounded the stock after the last earnings report included the confession about its delays in the 7-nm chips. New Sell and Neutral ratings after downgrades were seen by the likes of Barclays, Bernstein, BNP Paribas, BofA Securities, Deutsche Bank, Goldman Sachs, Morgan Stanley, Northland Capital and Roth. The $49.50 share price still compares against a Refinitiv consensus analyst target price of $56.50, and Intel’s 52-week trading range is $43.63 to $69.29.

Nvidia’s share price is now very close to the consensus target price of $515.93, but its stock has a habit of running up above and beyond what the analyst community has as published targets. 24/7 Wall St. tracked almost 20 analyst upgrades or price target hikes on August 20 after earnings. There are too many to mention, but here are the top price targets that were seen:

  • Rosenblatt (Buy) to $600 from $500
  • Needham (Buy) to $600 from $400
  • BofA Securities (Buy) from $520 to $600
  • Jefferies (Buy) to $570 from $415
  • Susquehanna (Positive) from $540 to $560
  • Truist (Buy) to $550 from $384

AMD’s shares ran after Intel’s debacle with earnings, and that was even before AMD’s report. Then its shares continued surging higher. AMD has a 52-week range of $27.43 to $87.29, and its consensus target price is still just above $75. Northland Capital recently issued a valuation downgrade to Market Perform from Outperform. These are the highest price targets issued since earnings:

  • Piper Sandler (Overweight) from $82 to $100
  • Cowen (Outperform) to $100 from $90
  • Jefferies (Buy) to $95 from $86
  • Susquehanna (raised to Positive from Neutral) and target of $85

There is no doubt about it that in this case Intel is the “value” stock and AMD and Nvidia are the growth stocks. What else cannot be denied is that Nvidia’s gain of 116% and AMD’s gain of 81% year to date have blown past Intel. In fact, Intel has lost nearly 18% year to date. Compared with a year ago, Intel is up just about 10%, versus gains of 180% for AMD and over 210% for Nvidia.

When it comes to investing in technology stocks, most investors are looking for growth and the future rather than value. This has proven to be the case for some time when it comes to these three leaders.