Normally, chip maker Intel (INTC) is not a trend-beater, especially in share prices. Today, however, was a whole different matter. It managed to gain modestly despite a chip sector that was generally in decline, thanks to a set of different factors.
This time around, a lot of that gain came out of Intel’s ongoing interest in becoming a chip foundry. Currently, about 90% of the world’s supply of advanced chips comes out of Taiwan. That’s a dangerous proposition by any measure, even if you completely ignore the geopolitics of it. One good tsunami and there goes the chip market. But Intel’s foundry push could bring a lot of that production back to the United States, and that’s bolstering sentiment.
Furthermore, with some new remarks from former and potential President Trump calling attention to Taiwan’s precarious safety with China lurking just a few nautical miles away, the idea of a United States-focused chip manufacturing operation suddenly takes on a new and exciting life.
But Then Again…
While Intel is certainly in a position to bring back the red, white, and blue to chip manufacturing, there are also some disturbing signs of red in Intel’s investment patterns, and without any mitigating white and blue. Intel Capital, which is the firm’s investment arm, is proving a troubling source of disquiet. Reports note that Intel Capital has stakes in 43 different technology startups in China and, over the course of the last 30 years, has invested in over 120 such groups.
This, naturally, has prompted quite a bit of concern and investigations, even as Intel labors under a set of sanctions designed to keep U.S. investment out of China.
Is Intel a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on three Buys, 24 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 2.06% rally in its share price over the past year, the average INTC price target of $38.02 per share implies 9.35% upside potential.
