S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Stock market today: Japan's benchmark briefly reaches all-time high after rally on Wall Street
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Applied Materials stock is Ray Dalio's favorite in this new cycle
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Palo Alto Networks aims at cyber security leadership
Spotify sounding better to analysts as company tunes into profits
66,000% upside on tiny biotech? (Ad)
3 Reasons the Capital One-Discover merger is a big deal
How major US stock indexes fared Wednesday, 2/21/2024
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Stock market today: Japan's benchmark briefly reaches all-time high after rally on Wall Street
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Applied Materials stock is Ray Dalio's favorite in this new cycle
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Palo Alto Networks aims at cyber security leadership
Spotify sounding better to analysts as company tunes into profits
66,000% upside on tiny biotech? (Ad)
3 Reasons the Capital One-Discover merger is a big deal
How major US stock indexes fared Wednesday, 2/21/2024
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Stock market today: Japan's benchmark briefly reaches all-time high after rally on Wall Street
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Applied Materials stock is Ray Dalio's favorite in this new cycle
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Palo Alto Networks aims at cyber security leadership
Spotify sounding better to analysts as company tunes into profits
66,000% upside on tiny biotech? (Ad)
3 Reasons the Capital One-Discover merger is a big deal
How major US stock indexes fared Wednesday, 2/21/2024
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Stock market today: Japan's benchmark briefly reaches all-time high after rally on Wall Street
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Applied Materials stock is Ray Dalio's favorite in this new cycle
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Palo Alto Networks aims at cyber security leadership
Spotify sounding better to analysts as company tunes into profits
66,000% upside on tiny biotech? (Ad)
3 Reasons the Capital One-Discover merger is a big deal
How major US stock indexes fared Wednesday, 2/21/2024

This Analysis Makes Intel An Attractive Watchlist Addition

computer chip integrated into motherboard

Key Points

  • Intel stock has been on a steady rise year to date, showing signs that the market is expecting some big things from the business shortly.
  • THIS shows that Intel is the best-positioned chip maker in the industry, and its CEO shows it by investing his own money into the stock. 
  • There are still plenty of unpriced tailwinds for the stock, and analysts seem clueless.
  • 5 stocks we like better than Brookfield Asset Management

Shares of Intel NASDAQ: INTC have been on a tear lately, rising by as much as 37% year to date while leaving the S&P 500 index behind by a gap of 18.5%; the strong momentum that is being built is a refreshing change from the steady declines that got started in 2021.

The chip industry has undergone many changes in the past couple of years, with revenues falling across the board for virtually every name in the space. These declines result from supply chain normalization after chip manufacturing hit a significant bottleneck during the 2020-2022 period. 

However, now that things are looking up and supply is returning to normal, the industry leaders have lost some of their pricing power and have to deal with curbs between the United States and China.

There are many reasons why Intel, the quiet name relative to the industry's high fliers, can become a worthwhile addition to your watchlist.

A Divided Front, Bullish Signs

Now that the United States and China are in a technological battle, placing further import and export curbs on each other around what chip-making technology they can access, Intel has been pushed into a political corner. 

Competitors like Micron Technology NASDAQ: MU have recently chosen to deal with China, investing over $600 million to put them on good terms with Asia's powerhouse.

On the other hand, Intel has dropped what could have been a $5.4 billion deal to acquire Israeli firm Tower Semiconductor NASDAQ: TSEM.


The latest blow to Intel CEO's plan to kickstart new growth came from Chinese antitrust denial, a window into how tough the industry is becoming with this new geopolitical divide. However, other avenues remain to be pursued with a less shaky foundation.

Despite some recent financial slowdowns in the latest quarterly financials, Intel is still making significant breakthroughs in other areas and is poised to deliver major surprises to shareholders.

There must be a reason why CEO Patrick Gelsinger has just invested half a million dollars in the stock at an average price of $33.86 a share. While not strictly at the same price, investors can still get in at roughly 1% above where the CEO decided the stock was cheap enough.

Markets are on the same page as Gelsinger, as they are rewarding the stock with a more aggressive valuation than Micron, implying that the company has chosen to back the right horse in this tech war.

Investors can pick up these clues by looking at the forward price-to-earnings ratio, which seeks to value the next twelve months of earnings in a company. In the case of Intel, a 20.6x multiple will place it above Micron's negative multiple, as shareholders expect the company to post another year of losses.

While traditional value investing would point out that Intel is now the more expensive alternative, a subtle message regarding market willingness to overpay for Intel stock speaks volumes, as there must be a perception of higher quality and growth around these figures.

Tailwinds at Play

The August ISM Manufacturing PMI report, which breaks down the dynamics inside America's eighteen largest industries, can be an excellent tool for investors to dig up Intel's next potential growth spur.

Regarding the computer industry, a nine-quarter contraction is dampening hopes of a rebound in the personal computer space. However, investors can look at the future rather than the past in this case, as there will be an inevitable return to average demand, bringing Intel's revenue back to its former glory.

Understanding why the PC rebound is a ticking timebomb is essential for investors since Intel owns 73.5% of all laptop CPUs as of the third quarter of 2023. Even a tiny increase in computer sales would translate into significant revenue and margin expansion jumps for Intel in this case.

Even though Advanced Micro Devices NASDAQ: AMD owns less than a quarter of the laptop CPU market, analysts are placing a 23.5% upside in that stock. However, Intel analyst ratings expect a net downside of 8.4% from today's prices.

What these analysts may be missing, apart from the ensuing PC demand rebound bringing a monstrous push to Intel, is the company's latest move to expand its foundry business.

Intel has been making aggressive investments in building foundries in America to bring chip-making capacity back to the United States, decentralizing Asia's grip on the global chip supply. Brookfield Asset Management NYSE: BAM is backing this ambitious plan.

A $30 billion joint investment has been made to enable Intel's foundry expansion, which will cushion the blows taken out of the company's free cash flow now that they have found a partner.

This matters to investors since, as Intel will not need to invest so much of its own money, return on capital will rise back to historical norms. True value investors should be nothing but ready to prove analysts wrong.

 

 

 

 

 

 

→ Shocking Bank Secret of the Ultra-Rich (From Stansberry Research) (Ad)

Should you invest $1,000 in Brookfield Asset Management right now?

Before you consider Brookfield Asset Management, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Brookfield Asset Management wasn't on the list.

While Brookfield Asset Management currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

A Guide To High-Short-Interest Stocks Cover

MarketBeat's analysts have just released their top five short plays for March 2024. Learn which stocks have the most short interest and how to trade them. Click the link below to see which companies made the list.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Intel (INTC)
4.6671 of 5 stars
$43.47-2.4%1.15%111.46Hold$41.48
Advanced Micro Devices (AMD)
4.4274 of 5 stars
$164.29-0.8%N/A315.95Moderate Buy$179.06
Micron Technology (MU)
4.1367 of 5 stars
$81.49+1.0%0.56%-12.98Moderate Buy$94.95
Brookfield Asset Management (BAM)
4.6264 of 5 stars
$40.57-0.5%3.75%35.90Moderate Buy$42.20
Compare These Stocks  Add These Stocks to My Watchlist 

Gabriel Osorio-Mazilli

About Gabriel Osorio-Mazilli

  • gosoriomazzilli@gmail.com

Contributing Author

Value Stocks, Asian Markets, Macro Economics

Experience

Gabriel Osorio-Mazilli has been a contributing writer for MarketBeat since 2023.

Areas of Expertise

Value investing, long/short trading, options, emerging markets

Education

CFA Level I candidate; Goldman Sachs corporate training; independent courses

Past Experience

Analyst at Goldman Sachs, associate at Citigroup, senior financial analyst in real estate


Featured Articles and Offers

7 Stocks to Help You Build Off January’s Gains

7 Stocks to Help You Build Off January’s Gains

It's frequently said that as January goes, so goes the market. If that's the case, it's time for investors to put money to work in the stock market.

Search Headlines: