Nvidia CEO Jensen Huang Throws Ceremonial First Pitch at KBO
Nvidia CEO Jensen Huang Throws Ceremonial First Pitch at KBO Baseball Game in Seoul

NEW YORK — Nvidia and Intel have both been caught in the market's sharpest technology selloff in more than a year, but for very different reasons. One is the dominant supplier of artificial intelligence chips facing doubts about its customers' spending; the other is a turnaround story that just suffered its worst month on record.

Nvidia: Strong growth, sentiment risk

Nvidia's business remains powerful. Its data center revenue reached $89 billion, up 117%, and management has guided to about $108 billion in revenue for the fiscal third quarter.

The stock has fallen anyway. It dropped about 15% from Oct. 6 to Nov. 4, to $203 a share. It then plunged 9.26% on Thursday before rebounding more than 4% in premarket trading Friday.

The valuation has become more modest. One analysis put Nvidia at roughly 23 times forward earnings, with analysts expecting earnings to grow about 95% during fiscal 2027.

Not all analysts are as calm. Melius Research cut its price target to $315 from $420 while keeping a Buy rating, warning about how Nvidia's customers will fund their spending. "The amount of paper is so large it has become the primary risk," the firm wrote.

Intel: A turnaround under pressure

Intel's problems are company-specific. The chipmaker guided to fourth-quarter adjusted earnings of 25 cents a share on revenue of $15 billion to $16 billion, against expectations of 43 cents and $17.1 billion, citing a plant shutdown in Israel and softness in the PC market.

The reaction was severe. Intel shares had their worst day since the 1970s, falling 28.58%.

There were bright spots. Intel's third-quarter revenue rose 21% to $16.5 billion. But weak PC demand clouds its recovery outlook.

Which stock is riskier?

Recent price action points to Intel as the more volatile of the two. Trefis data showed Intel down 39% over five days and 51% over a month, while Nvidia was down 7% and 14% over the same periods.

"The stock at the center of AI spending is down the least," Trefis noted, adding that Intel fell on its own weak profit forecast, not on anyone's AI budget.

Nvidia's risks are different. Its business remains closely tied to spending by cloud operators, so even a possible slowdown can undermine its valuation. The main danger is a pullback by major customers rather than a problem with its own execution.

Intel's risk is execution itself: reviving its foundry business, regaining PC strength and delivering on guidance after a sharp miss.

The Nov. 17 test

Nvidia faces a key test soon. It will publish third-quarter results after the market closes on Nov. 17. Its guidance calls for annual revenue growth of roughly 106%, but Nvidia will likely need to beat that for the stock to bounce after the report.

The bar is high. Simply hitting guidance or matching average analyst estimates would probably provoke a bearish response.

Bottom line

Nvidia offers a dominant market position, rapid earnings growth and a valuation that has come down, but its fortunes are tied to AI spending by a small group of large customers. Intel trades well below its highs after a historic collapse, offering more potential upside if its turnaround succeeds but carrying higher execution risk and much greater recent volatility.

This article is for informational purposes only and is not investment advice. Investors should consult a licensed financial adviser before making decisions.