Forget Nvidia: Why Intel Stock is the Dark Horse in the AI Chip Race – InvestorPlace
Is Intel a semiconductor stock investors should pay any attention to right now?
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Leading the AI chip race, we all know Nvidia (NASDAQ:NVDA) is king. Its competitors like Intel (NASDAQ:INTC) may not be completely out of the picture. Intel’s long-standing market share lead has been eaten away, but the company’s CPU and GPU chips could be set for some key upgrades. Intel stock is worth a look here.
Intel’s recent quarterly sales missed targets, causing a sharp decline it its stock price. The company’s Gaudi 3 release aims to generate $500M+ sales in H2 2024. Intel aims to become an AI leader through aggressive pricing and U.S. chip fab expansion, despite not breaking even until 2027. Here’s why Intel could change the game for AI chips.
Intel stock surged more than 5% on Monday amid renewed interest from analysts and institutional investors. The market is now paying attention to Intel’s Lunar Lake chips, which is set to mark a new milestone for its AI laptop innovations.
Intel only recently introduced its Lunar Lake chip that can easily integrate in any NPU, CPU, and GPU models. Compared to its predecessor, the Meteor Lake, Lunar Lake excels in AI performance, processing 40 TOPS, four times faster.
Intel claims Lunar Lake is 40% faster than Qualcomm’s Snapdragon X Elite, known for its performance in Microsoft’s Copilot Plus PCs. The new architecture also boasts improved energy efficiency, providing laptops with 60% longer battery life.
Portfolio managers from the Clearbridge Large Cap Value Strategy fund anticipated a turnaround for Intel in the second half the year. They viewed Intel as poised to capitalize on AI PCs in enterprises, leveraging its strong market position.
Despite current market challenges, they expressed confidence in Intel’s technology road map, expecting stabilization in PC and server market share amid growing IT workloads and infrastructure upgrades.
ClearBridge noted that increased AI spending has overshadowed investment in other tech sectors like software and traditional enterprise infrastructure.
This trend favored “AI winners” with higher valuations while penalizing perceived “AI losers” like Intel, which faced market scrutiny for setting 2027 financial targets below expectations amid sluggish demand for its core PC and server chips.
ClearBridge also took a contrarian stance on Intel, seeing potential in AI PC adoption in enterprises, where Intel holds a strong position. They expressed confidence in Intel’s technology road map, predicting market share stabilization in PCs and servers as IT workload growth and infrastructure upgrades drive cyclical recovery.
Intel made significant strides in competing with Nvidia and AMD, launching the Xeon 6 processors tailored for data centers, optimized for AI tasks.
The Arc GPU, based on the advanced Arc Battlemage design, boasts 50% higher speed and a NPU four times more efficient, positioning Intel competitively in AI. The Gaudi 2 and 3 AI processors, priced lower than Nvidia’s H100 and AMD’s MI300X GPUs, aim to regain market share effectively.
Intel appears reasonably priced at 29.15 times forward price-to-earnings (P/E), though it’s not leading the market currently.
Lower chip prices and clearer strategies in the foundry sector might stabilize INTC stock. Nonetheless, Intel remains a significant player worth watching, despite recent share declines.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
Technology, Artificial Intelligence, Semiconductor
Article printed from InvestorPlace Media, https://investorplace.com/2024/07/forget-nvidia-why-intel-stock-is-the-dark-horse-in-the-ai-chip-race/.
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