The Nasdaq Composite index has seen a decline of about 25% since the beginning of this year, and many semiconductor stocks have experienced huge sell-offs in 2022 trading sessions. Besides, concerns about possible prolonged recession and other macroeconomic pressures affecting the broader market, together with manufacturing problems and geopolitical risk factors have forced investors to abandon semiconductor stocks.
Nvidia (NVDA) and Intel (INTC) are leading chip manufacturers. They faced big sell-offs, and their shares trade down about 40% and 53% this year, respectively. Which of these semiconductor players is considered the better buy in today's bear market conditions? Keep on reading to find out about the two Motley Fool authors' viewpoints.
Nvidia's proven ability to innovate is one of the factors that are highly-ranked when considering investing in a tech company. It means more than just developing one great product or service. Nvidia may have proven its innovative capabilities by repeatedly improving its graphics processing units (GPUs). These sought-after computer chips are used in many modern gaming devices, servers, and screens in cars
Strong consumer demand has boosted Nvidia's revenue from $4.1 billion in 2014 to $26.9 billion in the recently completed year. Of course, sales increased as the pandemic began. It was influenced by the fact that people invested in home offices and played games more often, and online businesses needed more server capacity. Nvidia benefited from changing consumer behavior, selling its GPUs at premium prices and making a gross profit of over 62% for three years in a row.
Indeed, Nvidia could increase earnings per share at a compounded annual rate of 32.3% over the past 10 years due to the hard-to-replicate products. Admittedly, the company is facing near-term headwinds as the economy has reopened and consumer behavior has rapidly changed again. What is more, Nvidia chip sales are closely linked to cryptocurrency prices, as they can help customers earn digital assets.