- Intel stock rose some 5% on Monday as Lunar Lake chip gets noticed.
- Clearbridge Large Cap Value Strategy fund promotes Intel investment.
- Melius Research predicts return to form for Intel with new AI chip.
- Market is mixed on Friday as traders await Friday earnings.
Intel (INTC) stock advanced over 5% on Monday as the beaten-down legacy semiconductor is getting a renewed look from Wall Street analysts and institutional investors. The major interest is Intel’s soon-to-be released Lunar Lake chip, which is supposed to carry Intel’s entry into the burgeoning AI laptop market.
The stock market overall is mixed on Monday afternoon with many participants waiting on Thursday’s Consumer Price Index (CPI) inflation data and second-quarter bank earnings on Friday.
Intel stock news
Melius Research analyst Ben Reitzes released a recent report arguing that Intel offers a price-conscious means of gaining exposure to the AI theme. While Nvidia (NVDA), Taiwan Semiconductor (TSM) and Super Micro Computer (SMCI) have received the large majority of share price gains for their seats at the AI table, Reitzes believes that a “catch-up” trade would benefit Intel, Apple (AAPL) and Advanced Micro Devices (AMD) in the second half of the year after being perceived as left behind in the first half.
“[Microsoft’s delayed AI Recall feature] should eventually be fixed, so AI ready PCs should get going with the Lunar Lake chip from Intel and Strix Point processor from AMD — resulting in a big lift by” the fourth quarter, wrote Reitzes.
Before its recent rebound that began last week, Intel was down by 40% heading into the second half of the year, and it was one of the worst performers in the entire S&P 500 over that period. Because of that general cheapness, Reitzes expects a “seasonal bounce” to come to the rescue.
While Intel unveiled its Lunar Lake chip a little over a month ago, the market is only now beginning to forecast its possibilities.
The system-on-a-chip contains a CPU, an integrated GPU, and a neural processing unit (NPU), the latter of which allows the Lunar Lake chip to perform three times better in AI tasks than its predecessor, the Meteor Lake chip. The Lunar Lake can process 40 tera operations per second (TOPS), four times faster than its predecessor.
Now Intel is saying that its Lunar Lake chips are 40% faster than Qualcomm’s Arm-based Snapdragon X Elite chip that Microsoft has been shipping in its new Copilot Plus PCs. What’s more, the company is boasting about using far less energy to run them due to a completely new architecture. Laptops using the chips have 60% better battery life.
Separately, portfolio managers from the Clearbridge Large Cap Value Strategy fund said that a turnaround from Intel is expected in the second half of the year.
“We take a contrarian view of Intel and do not think it will be an AI loser, but rather see underappreciated opportunity as AI PCs ramp over the next few quarters in enterprises, where Intel has a stronghold,” wrote portfolio managers Dmitry Khaykin and Deepon Nag. “We also believe that the company’s technology roadmap remains intact, which we believe will lead to a stabilization in market share in its core PC and server markets. Both markets remain depressed, but we believe that aging infrastructure and the ongoing growth of IT workloads will lead to a cyclical recovery in both markets, which should benefit shares.”
Semiconductor stocks FAQs
A semiconductor is a term for various types of computer chips. Officially called semiconductor devices, these computer chips rely on semiconductor materials like silicon and gallium arsenide to process the electrical current that produces the modern world of computing. They come in many shapes, sizes, enhancements and configurations such as diodes, transistors and integrated circuits to more complicated applications like DRAM memory, simple processors and even GPUs.
First, there are the pure chip designers, such as Nvidia, AMD, Broadcom and Qualcomm. These companies use sophisticated software to design and test chips. Second, there are the equipment manufacturers that provide the machines necessary to build computer chips. These include ASML and Lam Research. Then, there are foundries that manufacture the chips. These include Taiwan Semiconductor and GlobalFoundries. Last of all are the integrated device manufacturers who design their own chips and additionally manufacture themselves. These include Samsung and Intel.
It is the observation that the number of transistors in an integrated circuit doubles every two years. The “law” is named after Gordon Moore, who founded Fairchild Semiconductor and later Intel. The doubling is possible due to the shrinking size of process nodes or parts in the computer chip. In 1971 the advanced commercial manufacturing had reached 10 microns in width. In 1987 semiconductor technology had advanced to 800 nanometers in width. By 1999, this process had moved to 180 nanometers. By 2007, the size had dropped to 32 nanometers, and this fell all the way to 3 nanometers in 2022, which is close to the size of human DNA.
In 2022, the global semiconductor industry had revenues just under $600 billion. In total, the industry shipped 1.15 trillion semiconductor units in 2021. The leading nations involved in the semiconductor supply chain are Taiwan, the United States, China, the Netherlands, South Korea, Japan and Israel.
Intel stock chart
Intel stock consolidated between $30 and $32 for the past two months, so it was high time that either bears or bulls made a run for it. From here, there isn't much in the way of resistance until the $42.50 to $45 supply window.
First off, INTC will need to reach and then close above $34.50. That is the low from April 25, after which the stock collapsed into its recent depression. Markets love to close historical gaps, so this is quite likely to happen this week.
The Moving Average Convergence Divergence (MACD) indicator just crossed above the zero threshold, another bullish signal. Other areas of resistance may come at $37 and $40, where bulls lost their flare in 2023.
INTC daily stock chart
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