Nvidia, with both its outsized market valuation and incredible share-price growth, has almost single-handedly lifted major stock indexes over the past two years. For good reason it’s the darling among semiconductor stocks.
That has come alongside a remarkable change in fortune for Intel, which once held that coveted position among investors—it dominated the chip market just as Microsoft’s Windows dominated operating systems during the internet boom of the 1990s. Since then, the chip maker has mostly been an also-ran, but maybe it’s time for it to make a comeback.
CEO Pat Gelsinger has a turnaround plan that’s starting to kick in. On Monday, the company announced that it will run its manufacturing unit as an independent business. The goal is to assure the company’s clients that they will get equal priority to Intel’s design unit, and that their designs will be secure. The hope is that it makes Intel more competitive with rivals such as Taiwan Semiconductor and Samsung Electronics.
There was also an early vote of confidence—it inked new contracts with Amazon and grants from the Pentagon worth billions. Intel stock climbed a healthy 6% after the announcement.
To be sure, Intel shares have fallen 60% this year while Nvidia’s have almost tripled—it would be too much to expect Intel to get anywhere close to Nvidia’s recent returns. Nevertheless, it shows the potential of the market for semiconductors, which is still large and growing.
The news could also raise hopes for other technology stocks, in particular those of the Magnificent 7 that have driven markets higher since 2023. That group, which includes Microsoft, Amazon, Apple, Google-parent Alphabet, Facebook-parent Meta Platforms, Tesla, and Nvidia, has struggled since the middle of July.
If interest-rate cuts from the Federal Reserve raise risk appetite among investors, the Mag 7 and the tech sector more generally could ride again.
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