Top Line
Shares of Intel Corp., a long-established Silicon Valley giant, rose to their highest in months on Tuesday, bucking a multi-year trend of underperforming earnings as investors favored Intel’s rivals amid the artificial intelligence boom.
After a tough first half of the year, Intel’s stock price is trending higher.
Key Facts
Intel shares rose 2% shortly after the market opened to above $35, their highest level since April 18, before easing to a modest 0.2% gain by mid-morning.
The gains came a day after the semiconductor chip maker’s shares rose 6.2% on Monday.
Adding fuel to the surge was a Monday note from Melius Research analyst Ben Reitzes, who predicted that “out of favor” Intel shares could see a “seasonal bounce” as part of a broader “catch-up trade” for some struggling stocks in the AI space that “have low expectations.”
Intel was the third-highest-returning stock on the S&P 500 index in July, with a 13% gain behind Tesla’s 29% and glass-maker and AI darling Corning’s 14%.
Intel’s recovery on Tuesday was part of a broader semiconductor rally, with the Philadelphia Stock Exchange’s Semiconductor Index (SOX) up nearly 1% and other major stocks such as Nvidia and Micron also up about 3%.
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Contra
Intel is the third worst performing stock listed in the S&P for the first half of 2024, with its shares still down 32% year to date. The company’s shares have underperformed many tech stocks this year and over the past few years. Intel’s 12-month return of 10% and three-year return of -33% are much worse than Nvidia (210%, 560%), Advanced Micro Devices (58%, 96%), Broadcom (112%, 296%), Micron (122%, 74%) and the Nasdaq Composite (36%, 28%). It’s not just the abstract idea that Intel is not well-suited to jump on the intense interest in generative AI, but also the long-term decline in revenue. Last year was Intel’s worst year since 2013 in terms of revenue and since 2001 in terms of net income.
Points to note
Intel reports quarterly results later this month. Analysts on average expect the company to report a modest 0.2% increase in second-quarter revenue, a fraction of market-dominating Nvidia’s more than 100% sales growth last quarter.
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