Winning should be the ultimate goal for every investor, and the key to success lies in finding stocks that are poised to capitalize on major trends. In today’s digital economy, two sectors stand out: semiconductors and artificial intelligence. Semiconductors are indispensable, powering everything from computers and tablets to cars and ovens. Meanwhile, artificial intelligence, the latest innovative technology, is rapidly transforming the tech industry and revolutionizing how we interact with machines, unfolding before our eyes in real time.
Grand View Research expects the AI industry to grow at a compound annual growth rate of more than 36% through 2030, with a current market value of more than $200 billion. Numbers like these tell us where the best stock picks are likely to be found: among semiconductor chip companies, especially those involved in AI.
Oppenheimer’s Rick Schafer, who watches the tech scene, follows this thesis in some of his recent stock picks. The analyst, who is ranked the fifth-best on Wall Street by TipRanks, singled out two AI chip stocks, Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC), for a closer look. He did a deep dive into both and didn’t hesitate to pick one as the AI stock to buy. Here are the details.
Nvidia
Nvidia is one of the tech giants. With a market cap of $2.58 trillion, it is the third-largest publicly traded company in the world. The company has built itself into this powerful position primarily by dominating the market for high-capacity, AI-enabled processor chips.
These chips have been part of Nvidia’s portfolio for decades. The company is best known for inventing the GPU chips that are the forerunners of today’s leading AI and data center processors. Originally developed for the gaming industry, the technology has proven its scalability and now forms the basis for a wide range of server, data center, and AI applications—all areas that rely on high processing speeds and capabilities to enable fast computing.
Earlier this year, Nvidia’s stock price hit an all-time high, surpassing $1,100. In response, the company executed a 10-for-1 stock split in June, which brought the stock down to around $110. Despite additional gains that pushed the stock to nearly $135 by mid-July, the stock has been on a downward trend ever since.
Several factors have affected Nvidia’s stock price. Market sentiment has turned cautious, with concerns about potential recession signs growing. As a result, technology stocks, which have driven recent market gains and are sometimes seen as overvalued, have been on the decline. As for Nvidia, the company recently announced a three-month delay in the release of its anticipated Blackwell B200 series chips. While Nvidia maintains that the production ramp-up is on schedule, deliveries are now expected to start early next year. This delay, despite large pre-orders from major AI developers like Microsoft, has investors worried.
Meanwhile, Nvidia’s popular H100 chipset line continues to show strong sales, and is expected to pick up the slack during the delay.
Nvidia will report its second-quarter 2025 financial results later this month, and is expected to report revenue of $28.54 billion — up 111% year-over-year — and non-accounting net earnings of 64 cents per share.
Despite the recent delay, Schafer remains strongly bullish on Nvidia stock, believing the stock is well positioned to continue growing.
“Recent reports indicate that NVDA has notified MSFT of delays to the upcoming Blackwell production, now expected in Q1 (compared to Q4)… In our view, the impact is likely to be minimal and short-lived (1-2Q) as the current Hopper lifecycle (30-40% below average selling price) is likely to be extended to fill the gap… NVDA’s competitive position remains intact, and we do not expect any share loss from the minor delay. Growing pains are expected as DC sales increase more than 5x YoY and we shift to an annual release cadence. We see NVDA as the best in AI, leveraging a complete AI hardware/software solution,” Shaffer said.
These comments support Schafer’s Outperform (Buy) rating on NVDA stock, while his $150 price target implies a one-year upside potential of more than 43%. (To watch Schafer’s track record, click here)
Overall, Nvidia stock has a Strong Buy rating from Wall Street, based on 41 recent analyst reviews that include 37 Buys and just 4 Holds. The shares are priced at $104.75 and their average price target of $144.17 implies a gain of about 38% over the next year. (See NVDA Stock Forecast)
Intel
Next up is Intel, a name you’ll probably recognize from the little stickers on the front of your home computer or laptop. Intel’s iCore series of chips have long been the market leader in the PC processor segment and are considered the industry standard. Leading the segment has helped Intel in recent years, even as artificial intelligence has moved to the forefront of the tech world. While Intel is no longer among the top ten chipmakers by market value, the company still ranks fourth in revenue — and has generated more than $55 billion in sales in the past four quarters.
But Intel wants to remain a leader, and that requires shifting its development and product lines toward AI-capable chips—without losing its grip on PC processors. The company has already begun launching new AI-capable products, including PC chips that can support AI-based PC applications. Intel brings a significant advantage to this expected shift: It is one of the few major chipmakers that also manufactures its own chips—and thus has greater control over production lines and delivery times. It is accustomed to producing semiconductors on an industrial scale and at high quality.
Intel has also been heavily committed to building its own foundry. The Federal Chips Act provided broad subsidies for the chip industry, and Intel has taken advantage of them to the tune of $8.5 billion. That’s on top of $11 billion in federally backed loans. That’s a lot of money, and Intel is using it to build and launch its own foundry projects in the United States—with a focus on producing AI-capable CPUs.
Such shifts don’t come cheap, and the price isn’t always directly measured in earnings. In its second-quarter 2024 report, Intel missed revenue and earnings. Net income of $12.83 billion fell nearly 1% from a year earlier and came in $150 million short of expectations, while non-GAAP earnings per share of 2 cents were 8 cents short of expectations. As a result, the company’s shares have fallen, and they’re still recovering; INTC shares are down more than 31% since the earnings release.
Oppenheimer’s Schafer sums up investors’ reservations about Intel in plain prose, saying of the company, “After building strong capital, management is working to boost profitability by announcing COGS/OPEX/CAPEX cuts to save $10 billion through 2025. Headcount is down 15%. Share losses and structural shift from traditional CPU-centric computing to AI-accelerated computing continue to weigh on INTC. Node/factory investments are squeezing margins. We remain on the sidelines as transformation efforts take root.”
This sideways stance is equivalent to an perform (i.e. hold) rating from the top analyst, refusing to put a price target on Intel stock until he sees how those tea leaves fall.
The Street is generally in agreement with a “hold” recommendation on this stock, as evidenced by the 31 recent analyst reviews that break down to one buy, 25 hold, and 5 sell — a consensus of “hold.” But the analyst would have said “buy” — because on average, he believes the stock, currently priced at $19.71, could rise to $27.82 in a year, yielding a 41% gain for new investors. (See INTC Stock Forecast)
For top-rated analyst Rick Schafer, the choice is clear: buy Nvidia stock. It’s clearly the best pick in AI right now.
To find good ideas for stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that aggregates all of TipRanks’ stock insights.
Disclaimer: The opinions expressed in this article are solely those of the analyst mentioned. The content is intended for informational purposes only. It is very important that you conduct your own analysis before making any investment.