Topline
Shares of legacy Silicon Valley giant Intel rallied Tuesday to their highest level in months, bucking the multiyear trend of underperformance as investors favored Intel’s rivals amid the artificial intelligence bonanza.
After a brutal first half, Intel stock is on an upward trajectory.
Key Facts
Intel stock rose 2% to over $35 shortly after market open, registering its highest share price since April 18, dipping to a milder 0.2% rise by midmorning.
The gains came a day after the semiconductor chip maker’s stock rose 6.2% Monday.
Spurring the surge was a Monday note from Melius Research analyst Ben Reitzes, who predicted the “unloved” Intel stock may be in line for a “seasonal bounce” as part of a broader “catch-up trade” for some under-performing stocks with “lower expectation” in AI.
Intel is now the third top-returning stock on the S&P 500 in July, with its 13% gain trailing only Tesla’s 29% and glassmaker and unlikely AI darling Corning’s 14%.
Intel’s recovery Tuesday was part of a broader chip rally, as the Philadelphia Stock Exchange's Semiconductor index (SOX) rose nearly 1%, with other major risers including Nvidia and Micron, shares of which both rose about 3%.
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Contra
Intel was the third-worst stock listed on the S&P during the first six months of 2024, and its share price remains down 32% year-to-date. Its stock has underperformed many of its high-tech peers this year and over the last several years. Intel’s 10% 12-month and -33% three-year returns are far worse than Nvidia’s (210%, 560%), Advanced Micro Devices’ (58%, 96%), Broadcom’s (112%, 296%), Micron’s (122%, 74%) and the Nasdaq Composite index (36%, 28%). It’s not just the abstract belief that Intel is less suited to pounce on the intense interest in generative AI, but it’s also a long-term decline in earnings. Last year was Intel’s worst year by revenue since 2013 and its worst year by net income since 2001.
What To Watch For
Intel will report quarterly results later this month. Average analyst forecasts predict the company will report a modest 0.2% increase in second-quarter revenues, a fraction of market dominator Nvidia’s more than 100% top line growth last quarter.
