The bright lights of Nvidia (NASDAQ:NVDA) are attracting massive attention. With the company’s growth heading into the stratosphere, fueled by the AI boom, it is easy to understand the positive investor sentiment.
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Though the AI chipmaker’s market-leading position is beyond doubt, there are other companies that could be well-positioned to capitalize on the AI revolution. Could semiconductor giant Intel (NASDAQ:INTC) be among the long-term winners?
Despite a challenging year, marked by nearly 40% decline in Intel’s stock value, investor Paul Franke contends that skepticism surrounding Intel’s prospects is misplaced, and that the company is on the cusp of a healthy period of growth.
“Intel’s dislike by investors has reached extreme proportions,” says the 5-star investor, who believes that “Intel’s new business setup and reinvestment effort could support significant sales/income growth into 2029.”
Franke notes Nvidia’s sky-high price-to-tangible-book value of 71.1x, suggesting the stock is priced for perfection. In contrast, Intel boasts a modest price-to-tangible-book value of 1.8x, positioning it on the other side of the ledger.
“With one of the lowest valuations in the Big Tech semiconductor sector, any unexpected rebound in earnings could catapult Intel past Nvidia for shareholder returns in coming years,” writes the investor.
Looking beyond its current valuation, Franke highlights reasons for optimism about Intel’s future, noting, “Intel is rapidly transforming into a top U.S. foundry company to manufacture high-end semiconductors, with government funding support.”
Furthermore, as geopolitical winds shift in uncertain patterns, Intel could serve as a domestic alternative to Southeast Asia (where an estimated 75% of high-end semiconductors are sourced). “Any slide toward heightened Chinese belligerence could cause geopolitical shock waves in the high-tech community, where fabless firms contract future production to new Intel facilities under construction,” Franke explains.
“So,” the investor sums up, “If you want to invest in the future, not the past, Intel may prove a materially better choice for your portfolio than alternative semiconductor picks including Nvidia.”
Reflecting his bullish stance, Franke recently upgraded Intel shares from Hold to Buy. (To watch Franke’s track record, click here)
On Wall Street, the view is less rosy. With 3 Buy and 3 Sell recommendations, along with 26 Holds, Intel is firmly in the Hold (i.e., Neutral) category. However, its average 12-month price target of $38.02 suggests an upside of ~24% from current levels. (View 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.
