Intel has been struggling due to low demand and margins, as well as competition from Advanced Micro Devices in the main CPU and server categories. The company's second-quarter results were admittedly quite disappointing, with non-GAAP (adjusted) revenue falling 17% year-on-year to $15.3 billion and adjusted earnings per share falling 79%. Meanwhile, Chipzilla hardly has a valuation that is dependent on growth, and its shares are trading at just 13.5 times expected earnings this year's expected earnings.
Intel also offers high dividend yields, with the current yield of approximately 4.7%. Whether the company should eventually reduce its payouts and focus resources on growth initiatives or not — investors' opinions are divided over this question. However, its ability to support payouts has improved amid funding options stemming from the recently adopted CHIPS and Science Act. The large stock yield could provide some buffer in the near term if volatility continues to cause swings in the market as a whole.
Intel is preparing to improve its competitive position in key categories, and its actions towards security of early access to ASML Holding's next-generation semiconductor manufacturing machines may signal that it has some promising chip designs that will help it start to mount a comeback in the next few years.
Chipzilla's product line looks weaker than Nvidia's, and the recent business slowdown is more dramatic. However, Nvidia still trades at about 41 times this year's expected earnings and 12.6 times expected sales even after major sell-offs.
Intel's more conservative valuation and recovery potential could indicate it as a more attractive buy in today's market.
This content is for informational purposes only and is not intended to be investing advice.
