3 Reasons to Buy Intel Stock in 2024: AI, Restructuring, and Valuation

Despite recent challenges, the company's restructuring efforts and attractive valuation make it a strong buy for 2024.

Introduction

Intel Corporation (NASDAQ: INTC) has been a pivotal player in the semiconductor industry for decades, but recent years have presented significant challenges. Despite facing intense competition and strategic missteps, Intel is now making strategic investments and restructuring efforts to position itself for a strong comeback. With a renewed focus on artificial intelligence (AI), enhanced manufacturing capabilities, and an attractive stock valuation, Intel presents a compelling investment opportunity in 2024.

AI Focus: Intel is making a big push into Artificial Intelligence (AI) chips, a rapidly growing market. While they might have missed some early gains, their recent chip releases and focus on AI could position them well for future growth.

Restructuring and Manufacturing: Intel’s restructuring to focus on building its own chip manufacturing capabilities. This, along with government funding, could make them a major player and position them to benefit from the overall increase in chip demand.

Undervalued Potential: Compared to other tech stocks, especially those in AI, Intel’s stock price might be attractive. Its lower valuation metrics suggest it could be a good value play if the company executes on its plans.

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Background of Intel Stock in 2024

Founded in 1968, Intel has been a pioneer in the semiconductor industry, shaping the computing world with its innovations.

Historically, Intel dominated the chip market with its advanced processors and strong market presence.

However, the rise of competitors like AMD and Nvidia, coupled with strategic missteps, has led to a decline in Intel’s market share and profitability in recent years.

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Why Intel Stock in 2024 is Hot ?

In recent years, Intel faced significant challenges, including delays in its restructuring processes, loss of key partnerships, and increased competition.

The company’s annual revenue and operating income have plunged since 2014, causing concern among investors.

However, Intel has been taking strategic steps to address these issues and reposition itself for future growth.

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Why Is Intel Stock 2024 Important?

Intel’s transformation is critical not only for the company but also for the broader tech industry.

As a major player in the semiconductor market, Intel’s success impacts the supply chain, technological advancements, and market dynamics.

The company’s renewed focus on AI and manufacturing is set to influence the next wave of technological innovations, making it a key player to watch.

1. Playing the Long Game in AI

Intel’s journey over the past decade has been tumultuous. Once the dominant player in the chip market, Intel faced significant setbacks, losing market share and key partnerships, most notably with Apple.

This led to a decline in both stock value and earnings. Since 2014, Intel’s annual revenue has decreased by 3%, and its operating income has plunged by 100%.

However, Intel is now focused on a long-term strategy to reclaim its position in the market. The company has undertaken significant restructuring, including a major round of layoffs in its sales and marketing departments.

These efforts are part of a broader plan to reduce spending by $10 billion by 2025.

Intel is also investing heavily in AI and its foundry business. The company is building new chip plants across the U.S. to enhance its manufacturing capabilities.

These efforts are supported by President Biden’s CHIPS Act, which grants Intel $8.5 billion to expand its manufacturing capacity.

This investment positions Intel to benefit from the growing demand for chips as the tech market continues to evolve.

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2. Steady Improvement in Earnings

Intel’s financial performance is starting to show signs of improvement. In the first quarter of 2024, Intel’s revenue increased by 9% year over year.

This is a significant turnaround from the previous year when revenue dropped by 36%.

One of the key drivers of this growth is Intel’s foundry segment, which reported $625 million in operating income, compared to an $880 million loss the previous year.

Additionally, Intel reduced its operating losses by about $400 million in Q1 2024.

Intel also saw a 31% rise in operating cash flow and a 30% increase in adjusted free cash flow.

These improvements indicate that Intel’s restructuring efforts and investments in AI and manufacturing are starting to pay off.

3. Invest in Intel Now While It’s Cheap

Intel’s stock currently offers a compelling value, particularly for investors interested in AI. When comparing key metrics such as price-to-earnings (P/E) and price-to-sales (P/S) ratios, Intel stands out with the lowest figures among its peers.

CompanyP/E RatioP/S Ratio
Intel13.52.7
Nvidia41.814.9
AMD35.39.8

This valuation, coupled with Intel’s strategic investments and improving financial performance, makes it a strong contender for investors looking to capitalize on the AI boom.

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Conclusion

Intel strategic moves in AI and restructuring coupled with its improving financial performance and attractive valuation, make it a compelling investment opportunity in 2024.

Despite recent challenges, the company’s focus on long-term growth and restructuring efforts are beginning to yield positive results.

Note: This is not an investment advice.

Kumar Priyadarshi
Kumar Priyadarshi

Kumar Joined IISER Pune after qualifying IIT-JEE in 2012. In his 5th year, he travelled to Singapore for his master’s thesis which yielded a Research Paper in ACS Nano. Kumar Joined Global Foundries as a process Engineer in Singapore working at 40 nm Process node. Working as a scientist at IIT Bombay as Senior Scientist, Kumar Led the team which built India’s 1st Memory Chip with Semiconductor Lab (SCL).

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