Introduction
During its heyday, $Intel(INTC)$ Intel was the dominant chipmaker and a leading provider of computer processors. AMD, its smaller rival, struggled to compete. However, in recent years, Intel has lost significant market share to AMD while Samsung has risen to become the largest chipmaker in the world. This loss of market share can be attributed to Intel's failure to keep up with AMD in terms of chip design, and its lagging behind TSMC and Samsung in terms of manufacturing technology. However, the company is attempting to make a comeback, and investors seem to be taking notice.
Intel's Investor Webinar
Sandra Rivera, Intel 's GM of Data Center and AI group
Yesterday, Intel announced that new products for the lucrative server market would come sooner than expected, causing the stock to surge 7.6%. The company's presentation on its current data center chips and future roadmap suggested that the pervasive delays in releasing new chips may now be a thing of the past. Intel also projected an annualized growth rate for data center processors in the low-20% range over the next five years, indicating a bullish outlook for its future in the market.
The CHIPS and Science Act
While Intel has lost significant market share to AMD in terms of chip design and TSMC and Samsung in terms of manufacturing technology, the future still looks bright. The US government's CHIPS and Science Act, which provides roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States, is expected to substantially benefit Intel on its home ground. As one of the few remaining USA semiconductors with actual semiconductor fabrication plants, Intel may receive government assistance to play catchup with other leaders like TSMC and Samsung.
Potential Growth with AI
In addition, the company is well-positioned to benefit from the growth in artificial intelligence (AI) and the associated demand for its products. With the increasing demand for AI technologies, the company could regain some of the server market share lost to AMD or at least grow its own earnings in the server market.
Short Term Outlook for INTC
However, investors should exercise caution as the stock is already approaching the overbought region with a relative strength index (RSI) of 68.9 ( see chart below). An RSI above 70 indicates that the stock is overbought, and the stock has been rising for the past five consecutive trading sessions, up more than 20% in March. There may be limited upside going forward, and it may present a good opportunity to short the stock once it goes into the overbought region, especially when the RSI is above 80.
For long-term investors, it may be better to wait for the stock to retract before buying into INTC. The 52-week low is at 24.59 and not very far from the current price. Looking at the monthly chart, the last time INTC went below 25 was in August 2015 (see chart below). One possible way to invest in INTC would be to sell put options at the strike price of 25 or below in the second half of the year, collecting premiums while waiting to buy INTC at a lower price.
Conclusion
In conclusion, while Intel has faced significant challenges in recent years, it may be on the road to recovery. With new products for the lucrative server market coming sooner than expected and bullish growth projections for data center processors, the company may be able to regain some of the market share lost to AMD. The CHIPS and Science Act may also provide a boost to Intel on its home ground. However, investors should exercise caution as the stock is already approaching the overbought region, and it may be better to wait for the stock to retract before buying in.
Let me know in the comments below if you think Intel can regain some of it's former glory. Thank you for reading.
@TigerStars @CaptainTiger @MillionaireTiger
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