Nvidia's $30B Intel Bet: Should You Buy INTC Too?

Nvidia made a shocking a $5 billion bet on a struggling rival Intel less than a year ago. That stake is now worth nearly $30 billion raising a much bigger question. What did Jensen Huang see coming and is there still time for investors to follow his bet? By the end of this video, I'll demonstrate with data whether Intel is actually a buy or whether the smarter move is a different chip stock hiding behind the flashy headlines. So, let's start with what Nvidia actually just revealed. But first, let me introduce myself. My name is Jacob Wade. I'm a financial coach for high income earners that want to retire early. And if you like timely stock pick videos just like this one, just hit the thumbs up button below. It tells me, "Hey, keep making more videos just like this." All right, let's think about this. If you put $5,000 into Intel stock the same day that Nvidia made this bet back in last September, you'd be sitting on close to $30,000 today, nearly 6x your money. Now, that's exactly what happened to Nvidia's position just at more of a corporate scale. Now, let's bring it to the present day. Nvidia's 13F filing, which was released on Friday, shows 214.8 million Intel shares worth nearly $30 billion plus a $21 billion stake in SpaceX. So, over $51 billion in strategic bets sitting outside of its core GPU business. And honestly, this wasn't luck. Last September, Intel was in a free fall and Nvidia stopped it with a $5 billion investment tied to the chip partnership between these two companies. Now, Intel used that lifeline and a new CEO, Lip Buotan, to start repairing its balance sheet. Now, Jensen Huang has since called this partnership worth tens of billions of dollars a year in business for both sides. So, Nvidia clearly still believes in Intel. The question is whether the rest of us should follow. And that's exactly what I'm about to dig into. Now, I should also mention that our editor-in-chief here at Wall Street Zen discusses stock market news and his own stock picks and in detail during his free weekly live trainings. So, you can join him live every Monday for free, but you do need to register to join. So, just scan the QR code on the screen right here or go to wallstreetzen.com/live to sign up. So, let's dig in. On the the surface, Intel, ticker symbol INTC, is one of the most exciting stories in the market right now. A $30 billion stake Nvidia, new CEO chasing one of tech's greatest turnarounds, real chip partnerships already in motion. I I get the excitement, but before you chase this trade, here's what's actually going on under the hood. Now, let's start with profitability because it's the one that matters the most. Intel's return on equity right now sits at a negative 10.8%. In plain English, the company is currently losing money relative to what its own shareholders have put into the company. So, that's really the reason this cheap beaten-down stock story doesn't actually hold up. And then, there's the actual balance sheet itself. Intel's long-term liabilities, $63.63 billion, actually exceed its short-term assets, which sit at 57.21 billion. And the debt just keeps piling up, to be honest. It's debt-to-equity ratio has climbed to 1.13, up from 0.18 just 5 years ago. That is basically a company borrowing a whole lot more, not less, while it tries to fund this turnaround story. And even this hyper-growth story is is actually a lot more modest than the headlines suggest. Analysts model revenue growing at around 13.77% a year, which is solid, but it's really not the kind of number that you would expect from a company that's supposedly sitting at the center of the AI boom. Now, there is a bright spot looking forward, though. Analysts do project that Intel's return on equity is swinging all the way up to 21.39% within the next 4 years. So, the turnaround case isn't necessarily crazy, it's just kind of early, and it hasn't shown up in the actual numbers yet. And Wall Street's own top analysts back that caution up. We track 28 different analysts on Intel and right now nearly 2/3 of them recommend it as a hold. The strong buy recommendations are really in the minority and two of the most accurate analysts that we track actually think that it's a strong sell. Now, let's put some actual names on that. Timothy O'Curry at UBS, ranked in the top 1% of analysts that we track based on stock picking performance, recommends INTC as a hold with a price target only modestly above today's levels. Now, Joseph Moore at Morgan Stanley, also a top 1% analyst, calls the stock a hold but actually has a price target suggesting the stock could fall nearly 20% in the coming year. Another top 1% ranked analyst, Harlan Sur at JPMorgan, is far more bearish. They flat out call the stock a strong sell with a price target similar to Joseph Moore's at Morgan Stanley. Now, there is a bull case here with Vivek Arya at Bank of America, also a top 1% analyst, calls Intel a strong buy and has a price target suggesting the stock could see a greater than 50% upside. But honestly, he's an outlier. Average all 28 price targets together and you land barely above where the stock trades today. Now, I'm about to back up that case for caution with our own quant ratings on INTC and don't worry, I do have an action step that you can take today that can position your portfolio to actually benefit from Nvidia's chip thesis here. So, that's coming up shortly. But first, if you are getting any value from this video, consider subscribing to this YouTube channel. We do this kind of grounded data-driven research every single week and I'd love to have you back for the next video. All right, let's dig into the Zen ratings. So, Wall Street's own top analysts are are basically landing right where our system does as well. With our Zen ratings, every stock we cover runs through a 115 factor review of its fundamentals and we distill that into a simple letter grade, an A through an F, to help you quickly spot stocks with a higher likelihood of actually beating the market. Now, Intel's grade is a C, which in our system is equivalent to a hold rating. Again, not the worst grade here, but certainly an indication that there's room for improvement. To see why, I actually dug into the seven underlying component grades that are nestled beneath the overall grade here. Because this gives me clues about the stock's strengths and weaknesses. Now, with Intel, value, financials, and AI all land at C grades. The balance sheet, the valuation, and Intel's actual AI business are actually still lagging. Now, growth and momentum are both a solid B grade, and sentiment is actually an A, which reflects the current hype, obviously. That's what you're watching really happen right now with this stock. So, I'm not saying Intel will never be a buy rating, but what can move Intel from a C up to an A rating? Really, it's going to be real, sustained profit, a debt-to-equity ratio that's actually shrinking instead of growing, and you're going to want to see value, financials, and AI grades climb out of the C range. And until that shows up in the numbers, Intel is really just a hold recommendation. A genuinely exciting story worth watching, backed by real conviction from Nvidia, but not backed by data today. But, I'm not going to leave you empty-handed here. Coming up, I'm going to show you a chip stock riding the exact same AI wave that is earning our system's highest rating right now. Now, real quick, if you like stock talk like this, then I once again remind you to just check out Wall Street Zen's no-cost live training sessions. You can join our editor-in-chief Steve Reitmeister on Mondays. And again, he doesn't just talk about what he's buying, but how he's actually finding the stocks so you can do the same in the days ahead. And he also shares his trade of the week, combining the best of Zen ratings with his 40-plus years of investing experience. So, again, if you're liking this type of content, I strongly recommend just pause the video for a second and register for for at wallstreetzen.com/live, or just scan the QR code on the screen here if you're watching on your TV or if you've got your phone handy, just scan, sign up, and we'll see you live on Monday. All right, so if Intel is a hold recommendation, where should this same conviction actually go? Now, I don't think you actually have to look very far and I think it's sitting one desk over in the exact same story. And again, this is not just theoretical. This week, Micron, ticker symbol MU, shares got a real jolt from the same forces driving the Nvidia Intel deal. Reports surfaced that the Trump administration is pushing Apple to stop sourcing memory chips from China. And that sent memory chip stocks, Micron included, higher today. It's the same theme sort of playing out twice, right? The US wants critical AI infrastructure chips memory manufacturing built and sourced closer to home. Nvidia is playing that game by propping up Intel's factories. Micron is playing it by being the memory chip maker that the actual country leans on. Now, let's talk performance because I want to be straight with you. Micron has already truly run. The stock is up over 650% over the last year alone, including a greater than 20% move in just the last 3 months. I'm not going to pretend that you're getting in early on Micron when we talk about it here today. But here's some data that suggests that this run isn't necessarily over and it's definitely not just hype. Micron's trailing 12-month earnings came in at $50.5 billion, up 701.4% year over year. And that growth is actually accelerating if you can believe it, sitting well above its own five-year average annual pace. Now, profit margins are at greater than 50%. The actual numbers have been outrunning the stock price, not the other way around. But of course, the real question is, what is ahead? Even there, the forecast stays strong. Analysts model earnings growth at another 40% a year going forward, which is ahead of both the semiconductor industry and the broader market. Revenue growth is projected at nearly 30% a year, which is roughly in line with its industry peers. So, the truly explosive phase may be moderating a bit, but moderating from a historic pace is a very different story than running out of room. And Wall Street agrees with the growth case here. We track 25 analysts that are on Micron. 92% of them recommend it as a buy or better. 16 say strong buy, seven say buy, and only two of them sit at a hold. And not a single one recommends it as a sell. Now, average their price targets together and you land at over 40% upside from current levels as of the week that I'm recording this. But the most bullish voices in the room, like top 1% ranked analyst CJ Muse of Canter Fitzgerald, believe the stock could actually see a greater than 100% additional upside. And our own system actually agrees here. Micron carries a Zen rating of an A, which is a strong buy recommendation and one of the highest rated names in the entire semiconductor space. And listen, you want a portfolio loaded with A-rated stocks because they've historically outperformed the S&P 500. Now, let's break the component grades down here. Financials, growth, and momentum all land at an A grade. Value and sentiment are a solid B. Now, the one grade to watch is safety, which sits at a D, which is the weakest number on our entire scorecard here. And honestly, that's the real risk here. A stock that's already moved this much can move just as fast in the other direction. So, size any position with that in mind. So, here's kind of my read on Micron. It has real accelerating fundamentals, a Wall Street consensus as about as lopsided as you'll find, and a system-wide strong buy recommendation even after a run most investors already missed. This seems like a no-brainer. So, all the way back to the question that I opened with, is there still time to follow Jensen Huang's bet? Here's my honest answer. Intel's turnaround is real, and Nvidia's continued ownership tells you serious money actually believes in it. But the data doesn't support jumping in today just because Nvidia's stake is worth 30 billion now instead of 5 billion. Watch Intel's next earnings report and how its found your business is actually executing. That's what we need them to improve for this rating to actually move. So, if you want exposure to this same AI infrastructure story with a stronger scorecard right now, Micron is really where I'd be looking. Again, as long as you're comfortable with the volatility that comes in a low safety graded stock. Either way, the lesson from this whole story isn't go and follow Nvidia into Intel. It's that when a company makes a bet of this size, it's actually worth paying attention to the theme and then letting the data decide which stock actually earns your money. Now, I'd love to hear from you. Are you on board with Intel? Or do you prefer to stick with stocks that have superior fundamentals? And if you prefer maybe a different alternative to Micron, drop a comment. We would love to hear from you. And if you want to explore another huge catalyst for chip stocks right now, be sure to check out the recent video on Elon Musk's multi-billion dollar semiconductor chip factory buildout. You can see all the details in this video right here.