With ‘AI mania’ possibly on the verge of taking a massive breather, what does this mean for Intel (NASDAQ:INTC)? Per my latest INTC stock analysis, this potential change in short-term market sentiment could be highly favorable for those who have yet to enter a position in the chip maker.
Although Intel has yet to really “cash in” on the AI chips boom, it’s very possible that shares take a tumble, in the event high enthusiasm for AI chip stocks cools down considerably.
This cooldown could really gain momentum as soon as this week, following Nvidia’s (NASDAQ:NVDA) latest quarterly earnings release. I’m not saying that INTC is about to fall back down to its 52-week low (over 44% below current prices).
However, the stock may experience a double-digit price decline, which, while painful for existing investors, could create a solid entry point for a long-term position.
Buying the Dip With Intel Could Quickly Look Like a Wise Move
With potential upside with Intel shares, remember that the real payoff will take time. That said, though, it’s not as if INTC is doomed to tread water after a pullback, only bouncing back far down the road.
It all has to do with Intel’s main non-AI growth catalyst: the build-out of the company’s foundry business. There have been quite a few negative developments lately regarding this catalyst. For instance, Intel’s plans to delay the bringing online of its $20 billion Ohio chip foundry facility.
Yet while news such as this has caused analysts and investors to become more bearish in their INTC stock analysis, a swing back to bullishness about the foundry catalyst could be just around the corner. After possibly revealing some more positive updates at its foundry event this week, even more positive news may emerge.
This includes updates about the extent to which Intel can tap into U.S. Federal subsidies for domestic semiconductor production, provided by the CHIPS Act. Again, this will not send INTC suddenly surging to new highs, but it may get shares back on track post-selloff.
When the True Payoff Could (Possibly) Take Shape
No matter how quickly Intel gains access to CHIP Act subsidies, between the time it’ll take to complete its build-out, plus the timeline for an overall recovery in the chips market, late 2025 at the earliest will be when we find out that the company’s big foundry gamble is a winning wager or a bust of a bet.
However, besides the potential for shares to rise on increased confidence about the foundry catalyst playing out, the potential for a further increase in confidence about Intel’s AI catalyst is something else leading me to lean bullish in my latest INTC stock analysis.
Excitement for the AI chips growth trend could simmer down, but not for long. Another wave of “mania” could arrive a few months down the road. Perhaps, centered on the potential for chip makers/chip designers to capitalize on booming demand for AI-PC chips.
Intel is trying to grab a piece of the AI-GPU market from Nvidia, with its Gaudi3 line of AI accelerators, yet it may be in the AI-compatible CPU market that this contender really gains ground. By 2025, the company could ship as many as 100 million CPUs for AI-PCs.
INTC Stock Analysis
If Intel goes from dark horse to top contender in the AI-CPU market starting later this year, expect it to have a major impact on INTC’s price performance.
The overall chip market recovery could wrap up around this time as well. Add in further progress with Intel’s foundry build-out, and again, it’s clear why I’m leaning bullish with my INTC stock analysis.
For 2025, forecasts currently call for earnings to rise by more than 71% compared to this year, from $1.36 to $2.33 per share. The top end of forecasts call for an even more dramatic earnings comeback (to $3.15 per share).
Not too shabby, for a stock trading for around $44.50 per share today. Better yet, a possible “can’t miss” opportunity, if a chip stock selloff pushes INTC down to between $30 and $40 per share.
INTC stock earns a B rating in Portfolio Grader.
— Louis Navellier and the Investor Place Research Staff
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