Nvidia eclipses Intel as most valuable US chipmaker

Joanna Estrada
July 12, 2020

Nvidia's market valuation briefly topped Intel's for the first time ever, powered by soaring demand for graphics chips in data centres and other fast-growing technology fields.

As reported by MarketWatch, this all became clear this week, when Nvidia share prices closed at $408.64, giving it a total market cap of $253.31 billion. Nvidia now has a market capitalization of about $ 248 billion, up from $ 245 billion for Intel. After all, Intel still generates more revenue than Nvidia, but there is no denying that Jensen's company has been a great investment as of late.

While Intel's stock has lost nearly 3% in 2020, Nvidia's has surged 68%. The worldwide shift to remote work during the coronavirus pandemic will likely continue to spur rapid growth in Nvidia's data center business.

Despite Nvidia's meteoric stock rise, its sales remain a fraction of Intel's.

Investors have rewarded this fast expansion with a rich valuation. In the past five years, it has soared more than eight-fold and trades at 74 times earnings.

Reflecting investors' optimism about Nvidia's future profit growth, Nvidia's shares are now trading at 45 times expected earnings, while Intel's trade at 12 times expected earnings.

Nvidia is now the third-largest chipmaker by market capitalization, behind Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co.

Intel is responding to Nvidia's success by introducing similar graphics chips. In 2016, Qualcomm Inc.'s market value topped Intel's as investors bet that smartphones would eclipse traditional computing in popularity.

Intel also lost the title of the world's largest chipmaker by revenue to Samsung Electronics Co.in 2017.

Thanks to the orders, Nvidia's datacenter business is expected to see increasing revenues every quarter in the next few years while the datacenter business' revenue contribution will also soon catch up with that of its gaming business, the sources said.

Other reports by Click Lancashire

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