Intel's Big Comeback: Why Now Is the Perfect Time to Invest in This Tech Giant

Why Intel's New Focus and AI Push Make It a Great Investment

Jun 11, 2024 - 08:02
Jun 11, 2024 - 08:03
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Intel's Big Comeback: Why Now Is the Perfect Time to Invest in This Tech Giant
Intel's Big Comeback: Why Now Is the Perfect Time to Invest in This Tech Giant

Intel has had an impressive history, with shares increasing by 116,000% since its IPO in 1971. Although Intel was once the leading chipmaker, it has faced several challenges over the past decade, such as losing market share, declining revenue, and ending a valuable partnership with Apple. However, recent developments indicate that Intel could be on the verge of a significant comeback. Here’s why now might be the perfect time to buy Intel stock.

Intel's New Business Model and AI Growth

Last year, Intel made a big announcement: it’s shifting to a foundry business model. This means Intel will start manufacturing chips for other companies, competing with giants like Taiwan Semiconductor Manufacturing Company and Samsung. This shift is part of Intel's plan to regain its position in the semiconductor market and become the top U.S. producer of AI chips.

Exciting New AI Products

The AI market is expected to grow rapidly, at about 37% annually through 2030, potentially reaching a value of nearly $2 trillion. This growth has attracted many tech companies, leading to a surge in chip stocks. For instance, Nvidia's stock has skyrocketed by 223% in the last year due to its leading AI chips.

While Intel is not as advanced in AI as Nvidia, it is making significant strides to capture a share of the AI chip market. At the Computex tech conference in Taiwan, Intel announced several new AI-enabled chips. One of the highlights was the Xeon 6 processor, which offers better performance and energy efficiency for data centers. This launch followed the introduction of the Gaudi 3 AI accelerator, designed to compete with Nvidia's products.

Intel also revealed competitive pricing for its Gaudi 3 and Gaudi 2 chips, making them more affordable than those from AMD and Nvidia. This strategy aims to secure Intel's place in the growing AI chip market.

Manufacturing: Intel's Key Advantage

While new AI products are promising, Intel's shift to a foundry business model could be the game-changer. The semiconductor foundry market is projected to double in size, reaching $231 billion by 2032 from $107 billion in 2022. Intel plans to build at least four new chip manufacturing plants in the U.S., aiming to become the nation’s leading AI chip manufacturer.

Unlike Nvidia and AMD, which focus on designing chips, Intel's move into manufacturing allows it to benefit from producing chips for the entire AI industry. This unique position could give Intel a significant advantage over its competitors.

Financial Outlook and Long-Term Potential

Building new manufacturing facilities is expensive and will cost Intel billions. However, recent financial results are encouraging. In the first quarter of 2024, Intel's foundry revenue increased by 4% year over year, and the segment's operating income reached $625 million, a significant improvement from the previous year’s losses.

Although it will take time for Intel to see the full benefits of its investment in manufacturing, the long-term payoff could be substantial.

Conclusion

Despite past challenges, Intel's strategic shift to a foundry model and its focus on AI products position it well for future growth. For investors, this could mean significant returns in the years to come. Now might be the perfect time to consider adding Intel stock to your portfolio.

Also Read: Nvidia's Stock Split: What Analysts Are Saying and Could It Join the Dow Jones?

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