Intel Stock Is Soaring, Leaving Nvidia Shares in the Dust This Year. But Which Stock Is a Better Buy Today?

Key Points

Intel's latest quarter showed impressive AI-driven demand for server processors.

Nvidia's business is in a different league than Intel's -- especially when it comes to growth.

Both stocks carry meaningful risks, but one looks like the better buy today.

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The artificial intelligence (AI) boom has lifted many semiconductor stocks. But not all AI chip stories are built the same way. Chipmaker Intel (NASDAQ: INTC) is late to the party, trying to establish itself as a central player in the AI era through its central processing units (CPUs), advanced packaging, and foundry ambitions. Nvidia (NASDAQ: NVDA), meanwhile, remains the clear leader in the AI boom itself, thanks to its graphics processing units (GPUs) and AI data center infrastructure.

Both companies, of course, could benefit from the continued build-out of AI infrastructure. But investors trying to choose between the two stocks need to separate a turnaround story from a business that is already producing extraordinary financial results.

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Intel: a stronger quarter, but still a turnaround

Intel's first-quarter results were far better than expected. Revenue rose 7% year over year to $13.6 billion, and non-GAAP (adjusted) earnings per share came in at $0.29 -- a major improvement from management's prior forecast for break-even adjusted earnings per share.

And the company is showing it can play in the AI space, too. Intel's first-quarter data center and AI segment revenue increased 22% year over year to $5.1 billion.

Additionally, the company is demonstrating that the CPU -- not just the GPU -- matters in the AI era.

Intel CEO Lip-Bu Tan emphasized this point during Intel's first-quarter earnings conference call.

"The CPU now serves as the orchestration layer and critical control plane for the entire AI stack," he said.

But investors should be careful not to confuse improvement with a completed turnaround. Intel still reported a GAAP loss of $3.7 billion in the quarter, and its foundry business remains deeply unprofitable. Intel's foundry revenue rose 16% year over year to $5.4 billion, but the business posted an operating loss of $2.4 billion.

And after the stock's post-earnings jump, Intel stock's valuation is becoming difficult to justify. At about $83 per share as of this writing, Intel trades at more than 70 times annualized first-quarter adjusted earnings (Intel's first-quarter adjusted earnings per share multiplied by four). That is a rich price for a business still trying to prove that its manufacturing reset and foundry strategy can work.

Nvidia: still in a different league

Nvidia's latest results show a company operating at an entirely different level.

In its fiscal fourth quarter of 2026 (the period ended Jan. 25, 2026), Nvidia's revenue rose 73% year over year to $68.1 billion, and data center revenue climbed 75% to $62.3 billion. Further, its earnings per share jumped 98% year over year to $1.76.

Even more, Nvidia's near-term outlook remains unusually strong.

Management guided for fiscal first-quarter 2027 revenue of $78 billion, plus or minus 2%. Compared to revenue of $44.1 billion in the prior-year period, that outlook implies growth of about 77% at the midpoint.

At Nvidia's stock price of about $208 as of this writing, shares trade at about 42 times fiscal 2026 earnings. But the stock trades at just 25 times analysts' consensus earnings-per-share forecast for the next 12 months.

Of course, Nvidia has risks too. Its main customers are enormous (leaving Nvidia with a concentrated customer base) and sophisticated -- and some are developing their own AI chips.

And regarding both stocks, the semiconductor industry has always been cyclical, even if this AI cycle looks unusually powerful. So investors should always be prepared for a possible consolidation phase in which growth suddenly slows. While there's no guarantee this happens, it shouldn't be ruled out.

The better buy

If I had to choose between Intel and Nvidia today, I would choose Nvidia.

Intel's latest quarter was encouraging, and the company's role in AI infrastructure may be more important than many investors expected just a year ago. But Intel still looks like a turnaround stock with significant execution risk. It needs to continue improving its product competitiveness, expand its supply, reduce foundry losses, and demonstrate that external customers will commit to its manufacturing roadmap.

Nvidia has its own risks, and investors should not ignore them. The stock's valuation still assumes strong AI infrastructure demand for years -- and any sign of slower growth or margin pressure could hurt shares.

But ultimately, Nvidia is already delivering staggering growth, and its valuation is more attractive than Intel's.

So, while both stocks are high risk, Nvidia arguably looks like the more attractive AI stock today.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.