Intel (INTC 5.13%) has been one of the hottest semiconductor stocks on the market over the past six months, rising an incredible 135% during this period and crushing the 47% gains registered by the PHLX Semiconductor Sector index. The stock's rise is the result of improving investor confidence, stemming from Chipzilla's technological progress, its cost-optimization efforts that are boosting the bottom line, and a solid balance sheet bolstered by investments from the U.S. government, Nvidia (NVDA 1.45%), and SoftBank.
However, Intel's latest results make it clear that it still has some way to go before it can capitalize on the secular growth of the semiconductor market.
Image source: Intel
Intel's stock plunged following its latest report
Intel released its fourth-quarter 2025 results on Jan. 22. Revenue fell 4% year over year to $13.7 billion, while non-GAAP earnings increased by 15% to $0.15 per share. The numbers were better than expected, but Intel's guidance sent the stock packing.
Chipzilla guided for break-even earnings in the current quarter, compared to Wall Street's expectations of $0.06 per share in adjusted earnings. The guidance points to a year-over-year decline in earnings from last year's level of $0.13 per share. The company's revenue will remain stagnant from the year-ago period. The stock fell 12% in aftermarket trading due to the poor bottom-line guidance.
Intel attributed this weakness to a supply shortage. The company notes that its revenue from the data center and artificial intelligence (DCAI) segment "would have been meaningfully higher if we had more supply."
Management noted that its supply constraints will be "most acute" in Q1. Intel, however, believes that supply will start improving in the second quarter of 2026 and continue to improve in the second half of the year.
NASDAQ: INTC
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As Intel is trading at a whopping 88 times trailing earnings and 85 times forward earnings, it's easy to see why investors pressed the panic button. Though management sounded upbeat about demand for its AI chips in both the personal computer and data center markets, a decline in earnings wasn't going to sit well with investors considering the stock's exorbitant valuation.
If you're looking to capitalize on the generative AI gold rush in the semiconductor market, it would be better to take a look at another chip giant that exercises great control over the supply chain.
Nvidia's supply-chain dominance is going to ensure terrific growth
Nvidia is the dominant player in the AI chip market with an estimated market share of 86% at the end of 2025. What's worth noting is that Nvidia's share of AI chips has grown from just 46% at the beginning of 2023 to last year's levels, driven mainly by the robust demand for its graphics processing units (GPUs), which are capable of massive parallel computing.
While Nvidia has enjoyed a technological advantage over its rivals in AI chips, it has also exercised impressive control over the supply chain. Foundry giant Taiwan Semiconductor Manufacturing reportedly allocated 70% of its advanced chip packaging capacity to Nvidia in 2025. This technology plays an important role in manufacturing advanced AI chips, which explains why Nvidia's rivals haven't made much of a dent in its market share.
NASDAQ: NVDA
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As it turns out, Nvidia has now become TSMC's top customer by displacing Apple. This means Nvidia is now in a solid position to influence TSMC's capacity-allocation decisions, which should help it maintain its solid control over the AI chip market. But even if Nvidia were to lose some share to rivals in AI chips, it can still clock outstanding revenue growth in the long run.
Bloomberg estimates that the AI accelerator market could generate $604 billion in revenue by 2033, with GPUs expected to account for 80% of that opportunity. Bloomberg estimates that Nvidia will control 70% to 75% of AI accelerator chips by 2030.
Assuming the company manages to sustain a 70% share in 2033, Nvidia's data center GPU revenue could hit $423 billion. For comparison, it sold an estimated $213 billion in data center chips in fiscal 2026 (which ends this month).
It's worth noting that Bloomberg expects AMD to become the second-largest player in AI chips, with an estimated 10% share by 2030. Marvell Technology and Broadcom, meanwhile, are expected to dominate the custom AI processor market. Intel doesn't find a mention in Bloomberg's projections, which makes it clear that Nvidia is set to remain the kingpin in AI chips in the long run.
That's why it would be a smart move to buy Nvidia stock right now, as it trades at an attractive 24 times forward earnings, well below Intel's forward earnings multiple. The additional catalysts in the automotive and gaming markets could further augment the company's growth in the long run, suggesting that it's the ideal way for investors to play the semiconductor market's secular growth.
