What’s Going on Inside Intel?

Leading chipmaker Intel (NASDAQ: INTC) specializes in supplying microprocessors, chipsets, and flash memory to various industries. The company is slowly shifting its focus from PC-centric business to data-centric businesses like artificial intelligence (AI), Internet of Things (IoT), and autonomous driving assistance systems (ADAS).

Despite facing various challenges such as processor shortages and intensifying competition, Intel stock has managed to return 6.69% to investors over the past year.

Foundry Expansion Efforts Bode Well

The semiconductor giant is pouring consistent and meaningful capital into the development of new processors and enhancement of production capabilities. In fact, Intel is all set to invest $25-$28 billion towards the acceleration of semiconductor production and foundry capacity expansion.

Importantly, Intel CEO Pat Gelsinger’s new foundry initiative includes a separate business division, Intel Foundry Services, which will provide adequate foundry capacity to address the burgeoning worldwide demand for semiconductor manufacturing.

Gelsinger expects to generate $100 billion in revenues from the new foundry business by 2025, which does not seem too ambitious considering the global chip shortages that continue to grip most of the industries indefinitely.

The Upcoming Mobileye IPO Brings New Hope

Interestingly, in December, Intel announced that it is on track to bring its automated driving segment Mobileye to the public markets. Importantly, the Mobileye unit is expecting to raise $50 billion in valuation in its upcoming IPO in the summer of 2022.

Tigress Financial Partners analyst Ivan Feinseth expects this initiative to “unlock potentially tremendous shareholder value,” pull in more capital for a focused approach at expanding Intel’s footing in a key area, and nurture more autonomous driving technology development partnerships.

Experts Display Mixed Sentiments

Feinseth is also upbeat about Intel’s Data Center business. “INTC’s Data Center growth drives increasing operating margins and Return on Capital, driving greater Economic Profit and increasing shareholder value creation,” said the analyst.

Moreover, Feinseth believes that strategic acquisitions have enabled the company to make the most of new opportunities in cloud computing, enterprise storage, data center processing, and IoT connectivity.

The analyst reiterated a Buy rating on the stock and increased the price target to $72 from $68.

However, the general analyst consensus seems to be cautious of the stock, with a Hold rating based on 5 Buys, 12 Holds, and 7 Sells. The Intel stock price prediction shows $54.67, indicating an upside of 2.88% from current price levels.

Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.