What happened
Shares of semiconductor giant Nvidia (NVDA -1.68%) dropped in Friday afternoon trading, falling 2.9% through 12:55 p.m. ET.
In the absence of any other news on Nvidia stock per se, it appears today's drop is tied to a Yahoo! Finance column that may have spooked investors.
Image source: Getty Images.
So what
Specifically, Yahoo! technology editor Daniel Howley warned today that "Intel is coming for Nvidia and AMD," and launching a new line of "Arc" graphics chips to attack Nvidia's (and AMD's) dominance in gaming. And granted, a line like "X company is coming for Y company" probably sounds a little bit scary -- but I really don't believe investors need to be frightened at this point.
Why not? Well, if you read past the headline, it turns out that Intel (INTC -0.53%) is still only "teasing" its introduction of Arc, and the company will only "eventually release" the new GPUs -- but has not yet.
That simply doesn't sound like a clear and present danger to me.
Now what
Granted, some of the arguments in the column make sense. "U.S. PC hardware sales grew 25% to $5.74 billion in 2021. And gaming isn't going anywhere anytime soon," for example. But while Yahoo! frames these statements as arguments for why Intel might want to expand its market share in GPUs -- and I agree -- they're also pretty good arguments for why Nvidia might grow its graphics business quite well if Intel fails to capture market share with Arc.
As Yahoo! notes, nearly half of Nvidia's revenue in 2021 came from the company's gaming division. You can't expect that Nvidia would give up those kinds of numbers without a fight.
Finally, consider further that, as Yahoo! admits, "we don't even know how Intel's Arc chip compares to Nvidia or AMD's entry-level discrete chips" yet. Given the uncertainty surrounding both Intel's timeline and its capabilities, I simply don't see this story as something Nvidia investors need to worry about anytime soon.
