Nvidia's Valuation Passes Intel's, With Stock Up 70% Year-To-Date

NVIDIA Corporation NVDA has achieved a first of sorts, as its market capitalization outgrew that of rival Intel Corporation INTC for the first time in Wednesday's session.

Nvidia Topples Intel: Nvidia has gained about 70% year-to-date and is trading at a record high.

With its 615 million outstanding shares, Nvidia's market capitalization works out to $249.321 billion.

In comparison, Intel's market capitalization stands at $246.634 billion. The chip giant's shares have pulled back about 1.54% year-to-date.

What's Driving The Nvidia Rally: Nvidia, founded in 1993, is the unparalleled leader in the graphics processing unit market, with its chips primarily used for gaming.

The company has also leveraged its GPU architecture to create platforms for virtual reality, high-performance computing and artificial intelligence.

Apart from gaming, the company's chips cater to the professional visualization, data center and automotive markets.

In fiscal year ended Jan. 26, 2020, gaming accounted for roughly 51% of Nvidia's  total revenue of $10.92 billion; professional visualization about 11%; data center about 27%; and automotive accounted for roughly 6.4%.

The remainder was made up by OEM and other revenues.

The gaming segment has received a shot in the arm this year from the stay-at-home economy that boosted discrete GPU sales, growing ray-tracing adoption in leading games and rising sales of the NINTENDO LTD's/ADR NTDOY Switch.

Nvidia is also in the sweet spot of product innovation. The company launched its 7nm Ampere architecture-based chip in mid-May.

"The Ampere GPU brings the biggest generational leap in computational horsepower in Nvidia's history, blurring the lines between its training and inference opportunities, UBS analyst Timothy Arcuri said in a note.

It launched its cloud gaming service GeForce Now in early February.

Going forward, the company is expected to benefit from the second-half launch of new consoles by Microsoft Corporation MSFT and Sony Corp SNE.

The new consoles could catalyze a major upgrade cycle for Nvidia, either to Turing or the next-gen 7nm Ampere, which could be unveiled by midsummer, according to BofA Securities' Vivek Arya.

Analyst also expect Nvidia's acquisition of Israeli chipmaker Mellanox to shore up its bottom line significantly.

Needham anticipates that Mellanox will add 85 cents per share to fiscal 2021 EPS.

INTC, NVDA Price Action: Intel shares were down 0.57% at $57.98 at the time of publication Wednesday, while Nvidia shares were up 2.42% at $404.41. 

Related Links:

Why BofA Recommends Buying GPU Plays AMD and Nvidia

Why Nvidia Has A New Street-High Price Target

Photo courtesy of Nvidia.