Intel (NASDAQ:INTC) has been on the hot seat lately among chip makers, but it’s been gamely fighting back all the same. However, a new investor letter from Ariel Investments is giving some investors pause. In fact, the near-term outlook for Intel isn’t looking all that positive, so investors abandoned some positions and sent shares down fractionally in Friday afternoon’s trading.
The word from Ariel, via its Ariel Global Fund first quarter 2024 investment letter, notes that investors were particularly excited over the growth of artificial intelligence (AI) and were moving accordingly. That wasn’t the only thing driving investors, though, as bank lending growth was making a comeback, some energy costs were in decline, global manufacturing seemed to be turning up, and the Japanese were engaging in key structural reforms that may re-fire that market.
Some of that would be good news for Intel, but that’s not likely to help it in the short term. Ariel’s letter pointed out that Intel’s near-term outlook was “disappointing” thanks to “ongoing weakness” and “inventory right-sizing in non-core products.”
Can Intel Compete?
So, the short term isn’t looking that good, but what about the long run? The good news is that it might be looking a little better. While there are some problems to consider, Intel is starting to look like a brighter prospect. In fact, some are directly comparing Intel chips to Nvidia (NASDAQ:NVDA) chips, and finding that there is some basis for a potential Intel win.
Intel is burning more power than its Nvidia equivalent—1,500 watts for Intel’s Falcon Shores line against 1,200 watts for the Blackwell—but if it can bring better performance and improvements in the manufacturing process, Intel may be able to come out ahead. Otherwise, it will lose a lot of ground, and quickly.
Is Intel a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on three Buys, 26 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 14.21% loss in its share price over the past year, the average INTC price target of $38.02 per share implies 25.19% upside potential.
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