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Intel | «The reports of my death are greatly exaggerated»

Ticker (Exchange) – INTC (NASDAQ)

ISIN - US4581401001

Current price – $20.1

Target price – $27

Growth potential – 34.3%🔥

Investment horizon – 1 month

Intel is an American company that manufactures microprocessors for personal computers, data centers, and artificial intelligence systems, as well as for the Internet of Things. The company's shares have shown a significant decline since the beginning of the year (-59.1%), a large portion of which occurred in the last few days (-35%). This was driven by weak quarterly earnings and overall market turbulence. However, such a reaction appears excessive. In the near future, a rebound in the stock to $27 can be expected, suggesting a growth potential of 34.2%.

Investment thesis

🔼Business Recovery Prospects. Intel's Q2 2024 earnings report greatly disappointed investors. The company's profit nearly fell to zero and was significantly below expectations. Additionally, dividends were cut. However, Intel is implementing a large-scale cost-cutting program, which allows for the anticipation of financial recovery in the future. Moreover, the company's strong position in the personal computer market will contribute to revenue growth amidst the spread of AI in this segment. In this situation, such a massive drop is likely to be at least partially offset soon.

🔼Improving Market Sentiment. The negative reaction of investors to Intel's report coincided with a general sell-off in the stock market due to weak employment data in the US. Such a collapse seems excessive, considering the generally good state of the American economy. Additionally, the anticipation of a near-term Fed rate cut will contribute to improving investor sentiment.

🔽Risks. Increasing competition in the processor market may worsen Intel's prospects and slow the recovery of its stock price. Additionally, the tightening of US export restrictions against China significantly impacts the company's revenue.

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Disclaimer

The information provided above is not an investment recommendation and does not guarantee or promise profitability. Before investing, you should assess the potential risks and rewards and determine your willingness and ability to accept such risks.

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