Stock of the Day

August 26, 2024

Intel (INTC)

$24.87
-$1.23 (-4.7%)
Market Cap: $112.97B

About Intel

Intel Corporation designs, develops, manufactures, markets, and sells computing and related products and services worldwide. It operates through Client Computing Group, Data Center and AI, Network and Edge, Mobileye, and Intel Foundry Services segments. The company's products portfolio comprises central processing units and chipsets, system-on-chips (SoCs), and multichip packages; mobile and desktop processors; hardware products comprising graphics processing units (GPUs), domain-specific accelerators, and field programmable gate arrays (FPGAs); and memory and storage, connectivity and networking, and other semiconductor products. It also offers silicon devices and software products; and optimization solutions for workloads, such as AI, cryptography, security, storage, networking, and leverages various features supporting diverse compute environments. In addition, the company develops and deploys advanced driver assistance systems (ADAS), and autonomous driving technologies and solutions; and provides advanced process technologies backed by an ecosystem of IP, EDA, and design services, as well as systems of chips, including advanced packaging technologies, software and accelerate bring-up, and integration of chips and driving standards. Further, it delivers and deploys intelligent edge platforms that allow developers to achieve agility and drive automation using AI for efficient operations with data integrity, as well as provides hardware and software platforms, tools, and ecosystem partnerships for digital transformation from the cloud to edge. The company serves original equipment manufacturers, original design manufacturers, cloud service providers, and other manufacturers and service providers. It has a strategic agreement with Synopsys, Inc. to develop EDA and IP solutions; and ARM that enables chip designers to build optimized compute SoCs on the Intel 18A process. Intel Corporation was incorporated in 1968 and is headquartered in Santa Clara, California.

Intel Bull Case

Here are some ways that investors could benefit from investing in Intel Co.:

  • Intel Co. has a strong institutional backing, with 64.53% of its stock owned by institutional investors, indicating confidence in the company's long-term prospects.
  • The company operates through multiple segments, including Client Computing Group and Data Center and AI, which diversifies its revenue streams and reduces reliance on a single market.
  • Recent analyst ratings show a consensus target price of $26.60, suggesting potential upside from the current stock price, which is around $21.00, providing a favorable risk-reward scenario for investors.
  • Intel Co. is actively involved in the development of advanced technologies, including AI and edge computing, positioning itself well in high-growth markets.
  • Despite recent earnings challenges, the company is expected to improve, with analysts forecasting a gradual recovery in earnings per share (EPS) to -0.11 for the current fiscal year.

Intel Bear Case

Investors should be bearish about investing in Intel Co. for these reasons:

  • Intel Co. reported a negative earnings per share of ($0.02), missing analysts' expectations significantly, which raises concerns about its current financial health.
  • The company has a negative return on equity of 3.27%, indicating that it is not generating profit effectively from its shareholders' investments.
  • With a negative net margin of 35.32%, Intel Co. is struggling to maintain profitability, which could deter potential investors looking for stable returns.
  • Recent analyst reports have issued multiple "sell" and "underperform" ratings, reflecting a lack of confidence in the stock's short-term performance.
  • The competitive landscape in the semiconductor industry is intense, with rivals continuously innovating, which could hinder Intel Co.'s market position and growth potential.

Intel: What's Going On And Why It's An Opportunity

Written By Sam Quirke on 8/6/2024

Homepage of intel website on the display of PC, url - intel.com.

Despite being on the back foot since the first week of January, shares of Intel Corporation (NASDAQ: INTC) took things to a whole new level last week. For investors, this will be a disappointing, though perhaps not all that surprising, turn of events. 

The tech titan, if it can still be called that, considering its shares are back trading at 1997 levels, has long struggled to keep up with the newer kids on the block. Its 100% rally through last December was decent by Intel's standards but paled compared to the 300% thrown down by the likes of NVIDIA Corporation (NASDAQ: NVDA)

And while the semiconductor and chip industry as a whole, including NVIDIA, has been softening since June, Intel was sliding hard as far back as April. But it was when the rest of the market started to sell off in the middle of last month, Intel investors started aggressively heading for the exit. 

Bearish Update for Intel

Their caution was more than justified last week after Intel reported its Q2 earnings. Not only did the company miss analyst expectations for both its headline numbers, but Intel also announced what are effectively emergency cash-saving measures, such as suspending its dividend and laying off more than 15% of its workforce. That amounted to more than 15,000 workers, which, even after years of redundancies in the tech sector, far outweighed anything that had come before it. 

Fingers were pointed at what CFO David Zinsner called "gross margin headwinds from the accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity." But the market didn't care, and a 25% gap down at the next open said as much. At yesterday's intraday low, Intel had shed more than 35% in just three sessions and fallen to its lowest level since 2012. As mentioned above, this also meant the stock was back trading at the same price as when Clinton started his second term. 

Intel's AI Ambitions and Recent Challenges

For a company that was, after years of underperformance, finally meant to have been turning things around and riding the artificial intelligence (AI) wave back to the forefront of the tech industry, it's a sorry turn of events. But while it's not hard to imagine many investors turning their back on Intel for good after this past week, that doesn't mean there isn't money to be made in the midst of this implosion. 

There are several reasons to think that, while undoubtedly violent and fairly justified, the current selloff is also starting to look overdone. Intel's Relative Strength Index (RSI) is, at just 16, at its lowest level since October 1987. That's right; you have to go back to Black Friday to find a time when Intel shares were, by this measure, at least more oversold. Interestingly, the stock also hit a low then and only went up from there, doubling in less than a year. 

Why Intel's Current Valuation Might Attract Risk-Averse Investors

Backing up this sense of being oversold is the fact that many of the refreshed price targets from analysts over the past week have price targets way above last night's closing price of $20. Barclays, for example, reduced theirs to $25, while UBS Group moved theirs down to $32. There's no doubt that Intel has once again seriously disappointed its investors, but there's also a strong argument to be made that, once again, the stock is extremely oversold. 

Northland Securities reiterated its Outperform rating and tempting $42 price target. This indicates a potential upside of more than 100%, an outlook that should interest even the most risk-averse investor.

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