Beneficiary of the US Chips Act Intel Corp (NASDAQ:INTC) had a positive week through Thursday, while Nvidia Corp (NASDAQ:NVDA) and Advanced Micro Devices, Inc (NASDAQ:AMD) lost 5% and 15%, respectively.
On Wednesday, the broader semiconductor sector lost more than $500 billion in market value as reports said the U.S. is stepping up its advanced semiconductor embargo against China.
Followed by presidential candidate Donald Trump attacking global contract chip maker Taiwan Semiconductor Manufacturing Co (NYSE:TSM). Investors took the opportunity to book profits.
Now, let’s take a look at the positive indicators for Intel. Last week, reports indicated that Intel CTO Greg Lavender with a goal of $1 billion in cloud software and developer subscription revenues, which may reach them before 2027.
In 2021, Intel generated more than $100 million in software revenue after CEO Pat Gelsinger recruited Lavender from VMware.
Lavender expects Intel’s upcoming Gaudi 3 chip to help secure a strong position in the AI chip market.
Nvidia leads the AI accelerator market with a 70% – 95% share, according to Mizuho Securities. Intel waiting for Gaudi 3 chip to generate revenue of $500 million by the end of 2024. Morgan Stanley expects total Gaudi mission in 2025 to generate $2 billion—$3 billion in revenue for Intel.
Intel and AMD are competing for dominance in the AI computing market.
Intel plans to ship chips for more than 100 million AI computers by 2025, including more than 40 million in 2024.
In the second quarter of 2024, DNB Asset Management, which manages about $88 billion in assets, made notable adjustments to its major US-traded technology holdings. They reduced their stake in Nvidia and more than doubled their investment in Intel.
In the second quarter of 2024, Intel processors accounted for 64% of all x86 CPU testing, while AMD processors made up 33%, according to Statistics. Focusing on notebook processors, Intel dominated with 75% of benchmark test results for the same period.
Intel trades at a forward P/E multiple of 32.57 versus AMD at 45.46 and Nvidia at 46.3 as it lacks the AI chip due to a decade of underinvestment that has led to a technology gap according to Forbes.
Intel’s price/sales at 2.67 is in stark contrast to AMD at 11.15 and Nvidia at 37.85. Intel stock has lost more than 2% in the past three months, more than 24% in the past 6 months.
Intel has a consensus price target $39.82 based on 33 analyst ratings. The most recent analyst rating was on July 16, when Cantor Fitzgerald Analyst CJ Muse reiterated Intel with a neutral rating and a price target of $40.
Analysts noted that Intel is experiencing a slow recovery in its PC and data center segments. Customers are delaying the recovery of server demand, prioritizing AI infrastructure over traditional servers.
Action Price: Shares of INTC were down 5.10% at $33.09 during last check on Friday.
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