In the latest of the ‘Who’s got a bigger market cap?’ game, the titan of the chipmaking industry has been defeated, and we have our new champion. Nvidia has surpassed Intel, the biggest chip making company in the world for decades now, and now sits atop the throne of the industry.
Of course, this is all a play of share prices and market valuations.
Nvidia’s share price has gone upwards of $404 and overtaken Intel to be the most valuable chipmaker in the U.S. What makes this feat iconic though, is the fact this is the first time in 20 years that Intel has fallen behind another chipmaker. At the time of Wednesday’s close, NVidia was valued at $251 billion, or roughly $3 billion more than Intel, which closed with a market cap of over $248 billion. Intel stock climbed by 0.5% to
close at $58.61. While NVidia shares advanced 3.5% to $408.64
Intel chipsets have been at the heart of PC’s, Laptops and Macs around the world for time immemorial. But then, you can not remain at the top and not innovate, something that happened with Intel off late. The company has been lagging behind in terms of both innovation as well as performance of its current line-up of chips. Add to that the headache that AMD’s high-performing, ultra-durable and highly affordable chips have become. And then there’s Apple. Arguably Intel’s oldest and largest client, Apple officially announced a shift to ARM processors for a section of new Macbooks due to arrive next year.
On the other hand NVidia is performing exceptionally well with its gaming chipsets, being the top dog in the industry for years now. The NVidia GTX series processors were already much cherished, and outperformed its competition every time (looking at you AMD), but then, NVidia came with a whole new RTX series of GPUs. The RTX series of graphics are some of the most powerful GPUs in the history of the world, and have pushed Nvidia’s demand to never seen before levels.
Moreover, the company managed to diversify its income, something that Intel struggles with till date. Nvidia has poured in billions of dollars and hour of research in setting up data centres around the world, and developing chips for AI purposes. Those investments have finally matured, as analyst models predict full-year data centre sales of $6.5 billion compared with video game sales of $6.1 billion for the company’s fiscal second quarter ending in July. This means that the company’s data centre revenue will begin to exceed its gaming sales.
The table was already set, with Intel taking a break from technological breakthroughs, and Nvidia launching industry disrupting technology year on year. The destabilisation of the share market this year just gave Nvidia the final nudge it needed to overtake Intel. While the former managed to make a huge comeback from the S&P 500 quake on March 23rd, Intel just didn’t get the same love from the market. Nvidia managed to gain a 68% traction in its shares in 2020, Intel has lost 3%.
All of this, bundled with Nvidia’s growing revenues from its datacenter business due to coronavirus, and Intel facing tough competition from the likes of Samsung and TMC, has resulted in Nvidia becoming the king of the chip making industry.
Let’s hope this makes an impact on the R&D team of Intel who will try to make
comparatively larger enhancements than they have made in recent years. We
might as well see large performance growth in 11th generation of Intel