Between the riches of the AI race and the upward trends in the markets in 2024, most technology stocks have the wind at their backs. However, Intel (NASDAQ:INTC) stands out as a stark exception. The semiconductor giant has tumbled nearly 60% this year and has plummeted 34% since the end of July.
The reasons for the poor performance are multiple, including increasing competition in the CPU market from AMD, Apple’s decision to begin sourcing its chip needs internally, and a number of other manufacturing delays. However, perhaps the biggest issue was the failure to properly account for the game-changing AI technology.
Despite all the poor tidings, investor Dan Victor argues that Intel could provide value for those willing to look beyond the stock’s current performance.
“The bigger picture is that Intel has had its missteps, but remains fundamentally sound,” writes the investor.
Victor cites a number of factors for his bullish take, including recent news that Intel is considering offloading its struggling chip foundry unit. Though still not official, Intel has reportedly engaged with both Goldman Sachs and Morgan Stanley to review potential options.
“A scenario where Intel sells or spins off the foundry business could be the best course of action to place the core product groups on a path for sustainable and profitable growth,” writes Victor.
The investor also points to the strong performance of Intel’s most profitable division, the Client Computing Group, which generated $7.4 billion in revenue during Q2 and is expected to ship over 40 million AI PC processors in 2024.
Though acknowledging that “the bearish case will be louder,” Victor argues the market has already priced in many of the negatives surrounding the stock.
“We view Intel stock as an investment opportunity,” Victor concludes, giving it a Buy rating and setting a target price of $30, implying a potential upside of 49% over the next year. (To watch Victor’s track record, click here)
Wall Street, however, remains more cautious. The 32 analyst ratings from the past three months break down into 1 Buy, 26 Hold, and 5 Sell ratings, making Intel a consensus Hold. However, the average 12-month price target of $27.32 represents potential gains of ~36%, indicating that several Wall Street analysts aren’t too far off from Victor’s outlook. (See INTC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
