The AI revolution has been the quite a boon for semiconductor firms, with incredible growth driving booming valuations throughout the industry.
However, Intel (NASDAQ:INTC) has struggled to capitalize on this trend. Challenges with its 10 nm nodes have impeded the company’s progress over the past decade, making recovery difficult. More recently, Intel’s 13th and 14th-generation CPUs have experienced issues, impacting both the company’s financial performance and its reputation as a leading industry player.
Overall, Intel has seen a nearly 40% decline in its value in 2024. Yet, according to Value Portfolio, the tough times could serve as an opportunity to buy Intel shares at a bargain price.
“This weakness makes Intel a valuable investment,” writes the five-star investor, who sits at the top 1% of TipRanks’ stock pros. “Its low market cap means substantial upside should the company become competitive again.”
On that note, the investor believes that Intel has several positive factors on its side. For one, the company’s leadership has acknowledged its underperformance and is actively working to address previous shortcomings. Intel’s ambitious “5 nodes in 4 years” plan aims to position the company on par with industry leaders like Samsung and TSMC. This could place Intel on a lucrative pathway “as artificial intelligence continues to increase demand for cutting-edge chips.”
Moreover, Intel benefits from its strong position in the U.S., supported by the government’s push for robust domestic manufacturing of critical technology. Intel has already received $8.5 billion from the U.S. government via the Chips Act.
Financially, Intel remains relatively strong, according to the investor, with steady revenue and solid profits. The company’s Q1 revenue met expectations, and its efficiency enabled it to surpass estimates in both gross margin and EPS. Intel expects to see revenue and EPS growth for FY 2024, indicating continued progress toward its growth objectives.
All in all, the Value Portfolio rates Intel shares a Buy, arguing that “the company is undervalued and has the ability to drive strong returns before its reputation is fixed.” (To watch Value Portfolio’s track record, click here)
Analysts on Wall Street are less enthused. Out of 16 recent analyst ratings, 3 are Buy, 12 are Hold, and 1 is Sell, leading to a consensus Hold rating for Intel. Nonetheless, the company’s 12-month average price target of $40.21 suggests a potential upside of ~31%. This seems to indicate that a number of those who have rated the stock a Hold still envision gains on the horizon. (View INTC stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
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.
