Soaring NVIDIA or stagnant Intel? Goldman Sachs has a clear stance

NVIDIA or Intel, who is the preferred choice for chip stocks?

Goldman Sachs star analyst Toshiya Hari has no hesitation in choosing the former.

This week, Hari raised NVIDIA's target price from $625 to $800, indicating an 11% upside potential from Friday's closing price.

As the global leader in AI computing power, NVIDIA's stock price has surged nearly 400% in the past three years, with a gain of over 210% in the past year alone. By 2024, NVIDIA's stock price continued to rise, with an increase of nearly 50% in just over a month, and its market value reached $1.78 trillion, making it the fifth largest listed company in the US stock market.

Hari pointed out that investments in AI infrastructure construction by governments and technology giants around the world will further drive NVIDIA's revenue, and he raised the average full-year profit forecast for 2025-2026 by 22%.

Hari emphasized the resilience of NVIDIA's data center division, with an expected 14% YoY growth in data center revenue in 2025.

He said, "Based on recent conversations, most investors seem to have a good understanding of NVIDIA's profitability in 2024, and they are more concerned about the development trajectory of the data center business in 2025."

NVIDIA's fourth-quarter earnings report is scheduled to be released after the Spring Festival on February 21. Wall Street expects NVIDIA's fourth-quarter revenue to reach $20.27 billion, with non-GAAP earnings per share of $4.53, achieving continuous growth in both revenue and net profit.

In contrast, Hari's attitude towards Intel is more cautious and conservative, maintaining a sell rating on Intel.

"While we are encouraged by the various strategic actions taken by (Intel) management in the past 12-18 months and believe that further clarity on chip funding may boost sentiment for the stock in the short term, we maintain a sell rating on Intel and continue to wait for signs of stability in the data center computing market share and/or substantial progress in external foundry strategies."

Goldman Sachs' target price for the sell rating is $39, indicating a 10% downside potential for Intel in the next year. Intel's stock price has already fallen more than 9% year-to-date, with a market value slightly above $180 billion. Intel, with its dominant position in the personal computer processor market, has consistently ranked among the top ten in the chip industry, even holding the number one position just a few years ago.

However, in the AI wave of 2022-2023, Intel failed to keep up with its peers in launching AI chips, thus losing the market opportunity. As a result, Intel's revenue has declined for seven consecutive quarters, falling from the throne of "chip king".

Intel's fourth-quarter revenue and earnings per share were higher than expected, but the data center business, which was closely watched, declined by 10% YoY, disappointing Wall Street. The first-quarter performance guidance also fell far short of analysts' expectations.