“Dead Money”: Intel Stock (NASDAQ:INTC) Takes Aim at Memory Market

So things have not been going well for chip stock Intel (INTC) of late. And though there are some signs of a comeback in progress, they are proving slower than some would like. In fact, some are starting to refer to Intel as “dead money.” But a new play for the memory market might change some minds, and investors sure have some faith in their old favorite. Intel shares are up modestly in Monday afternoon’s trading.

Reports note that Intel is teaming up with SoftBank (SFTBY) to produce a substitute for “high-bandwidth memory” (HBM) chips. Typically, HBM chips are a fixture in data centers, particularly those that put artificial intelligence (AI) applications in play. To that end, Intel and SoftBank built Saimemory, an operation that may make things a little better for the data center market, and give SoftBank and Intel some new cash flow.

HBM chips, reports note, have some unpleasant downsides. They are difficult to manufacture, and thus, expensive. Plus they have a tendency to run hot as they serve as the memory basis for AI applications. They also need more power on top of it. Enter Intel, who has a plan for a “stacked DRAM substitute,” using patents from several arms of Japanese academia. The duo look to have a prototype ready to go by 2027, and hopefully, will go live with a full commercial release before the 2020s come to an end.

“Dead Money”?

For those of you who first thought of a DLC pack from Fallout: New Vegas when you heard the words “dead money,” I assure you we are not headed to the Sierra Madre on this one. Reports from Susequehanna analyst Christopher Rolland—who has a five-star rating on TipRanks—gave Intel the title of “dead money,” which basically means, “it’s going nowhere and not producing much.”

Rolland made this shocking declaration in light of Intel’s slow growth of late and mass layoffs, which suggests that there will not be a lot of growth coming in the near term either. Rolland does suggest that, if Intel were to separate its production and manufacturing operations, that could put some life back into Intel. Given the current environment—not to mention President Trump’s aspirations toward domestic production—getting a better focused production arm could be helpful for Intel.

Is Intel a Buy, Hold or Sell?

Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on two Buys, 25 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 35.46% loss in its share price over the past year, the average INTC price target of $21.29 per share implies 7.53% upside potential.

See more INTC analyst ratings

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