The artificial-intelligence trade came under pressure on Friday but chip stocks roared back on Monday and there was one big standout.
Intel stock jumped 11.19% to $110.27, leading the S&P 500 for the trading session and erasing some of last week's losses. For comparison, the S&P 500 and the tech-heavy Nasdaq Composite rose 0.3% and 0.9%, respectively.
Intel was one of many chip stocks rallying Monday following a brutal AI selloff that rocked the market on Friday. The PHLX Semiconductor Index marked its worst one-day drop since 2020 on Friday.
The broad chip rally on Monday included Broadcom climbing 2.8% after slumping in back-to-back sessions following mediocre revenue guidance.
Fellow semiconductor company Advanced Micro Devices and server maker Super Micro Computer both gained more than 5%. Nvidia rose 1.7%.
While there was overall strength in semiconductor stocks, Intel stock may have also received a boost after the Information reported that AI chip design companies, including Alphabet-owned Google and Nvidia, have been quietly turning to Intel as a backup manufacturer for advanced processors to meet overwhelming demand.
Intel declined to comment to Barron's. Nvidia and Alphabet didn't respond to requests for comment.
There are other reasons why investors may be feeling optimistic about Intel.
Morgan Stanley analysts, led by Joseph Moore, wrote on June 1 that Intel continues to see strong server central processing until, or CPU, trends.
"We continue to see the most important element of the Intel story as the server roadmap, rather than foundry/optionality opportunities," Moore wrote. "We likely see enough progress to keep the foundry alive, with a clear ability to beat-and-raise near term given server CPU shortages."
Intel CEO Lip-Bu Tan, in his keynote speech at the Computex conference in Taiwan last Tuesday, said there was strong CPU demand throughout the market and that in the past four weeks other CEOs have been calling him asking for more CPUs, the Taipei Times reported.
The chip maker last week announced it was teaming up with Apple supplier Foxconn to develop artificial-intelligence infrastructure.
However, the Wall Street consensus on Intel stock remains cautious. Of the 51 firms polled by FactSet, Intel stock has an average Hold rating and a price target of $98.15.
Part of that could be due to the huge gains Intel stock has booked.
Shares have climbed 197% this year have surged 438% over the past 12 months.
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