Forget INVISTA: This Stock Is a Great Choice for Artificial Intelligence (AI)

Undeniably.Nvidia Selling some of the most powerful artificial intelligence (AI) chips in the market today, the company dominates the market with a share of 80%. Although the stock has risen by triple digits over the past year, it remains a solid long-term investment opportunity. But that doesn't mean it's the best AI buy out there.

In fact, one of Nvidia's competitors - a company that is lagging behind in the AI race - is actually a much tighter buying opportunity today, as it may be ripe for a big turnaround and long-term growth. I'm talking about chipmakers.Intel (NASDAQ: INTC)Two of its recent moves could change the company's rules of the game. Let's take a closer look at this AI stock that's worth buying now.

1 Trillion Dollar Market

Let's start by saying that I don't expect Intel to replace NVIDIA in the graphics processing unit (GPU) market. But the good news is that Intel doesn't have to do that to succeed in the market that powers AI. Analysts predict that by the end of this decade, the AI market will exceed $1 trillion, and the three most prominent chip design companies are Nvidia,Advanced Micro Devices and Intel.

Considering the size of the market and the fact that AI could play a role in almost any industry, from therapies to automobiles, demand for chips could be high enough to drive revenue growth for all three companies.

While Intel is the world leader in the central processing unit (CPU) market, with chips powering a wide range of computing operations, the company is lagging behind in the area of GPUs, which are known for accomplishing a wide range of tasks simultaneously, initially powering high-frequency games and graphics applications. It still does, but today the biggest business for GPUs is powering artificial intelligence.

Now, let's talk about two smart moves by Intel. Late last year, Intel announced an exciting new lineup of AI products, including the Intel Core Ultra mobile processor family, which offers innovations in computing, graphics, and battery life. According to the company, Intel Core Ultra processors usher in the era of the AI PC, a powerful computer that can handle AI tasks. The company believes this is the biggest change in personal computing since laptops were first connected to WiFi 25 years ago.

Latest Xeon Processor

The chip giant also unveiled its latest family of Xeon processors to boost AI performance, and announced that the Gaudi 3 AI gas pedal for deep learning and big model generative AI will be available in 2024. Intel expects to increase its share of the gas pedal market this year as demand in this area continues to grow.

Second, Intel is making a bet that comes with significant risk, but if it succeeds, it could win big. The company is opening up its manufacturing network to other companies, with the goal of becoming the world's second-largest foundry by 2030. Many companies, such as Nvidia, design chips but don't actually make them, instead turning to foundries. Currently, the world's largest foundries areTaiwan Semiconductor Manufacturing Co..

Intel, which already has expertise in this area and has long produced its own chips, will now sell these manufacturing services to other companies. The company said it started last year with one customer for its 18A process, but by the end of the year had won three more customers and five more for advanced packaging. To make its own chips, Intel will become a customer of its foundry - just like other chip designers.

U.S. Government Support for Intel

The U.S. government supports Intel's move to reduce U.S. dependence on foreign manufacturers - the U.S. government recently proposed direct funding of up to $8.5 billion for Intel's semiconductor manufacturing projects in four states. Even so, the program is a huge investment for Intel, which has pledged to invest $100 billion over five years in U.S. chip-making capacity.

Now, let's look at Intel's valuation. Considering that analysts expect Intel to grow at a double-digit annualized rate over the next five years, Intel's shares trade at 27 times expected earnings, which is a reasonable price. If Intel wins its bets on artificial intelligence and manufacturing, then its revenue growth will really take off over time. That's why Intel is now a great choice for long-term AI growth investors.

Should you invest $1,000 in Intel now?

Consider this before buying Intel stock:

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Adria Cimino does not own any of the stocks mentioned above.The Motley Fool recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and also recommends the following options: Intel January 2023 $57.50 Call Option Long, Intel January 2025 $45 Call Option Long, and Intel May 2024 $47 Call Option Short. The Motley Fool has a disclosure policy.

Forget INVISTA: This Stock Is a Great Choice for Artificial Intelligence (AI) was originally published by The Motley Fool.