A Potential Rebound on the Horizon for Intel?
The semiconductor sector has experienced a remarkable surge in recent years, with notable exceptions like Intel. Despite its peers, Nvidia and Advanced Micro Devices, seeing significant gains of 721% and 83%, respectively, Intel’s shares have plummeted by 25% since November 2022. However, a closer examination of Intel’s price movement reveals potential reasons to believe the stock is poised for a comeback.
A Familiar Pattern Emerges
Intel’s price-to-sales (P/S) ratio has followed a striking pattern, bottoming out at around 1.5 in August and September. This level was last seen in 2022, coinciding with a subsequent surge in Intel’s shares. Although history doesn’t guarantee future performance, this development warrants attention.
Catalysts for a Rebound
Several factors could contribute to Intel’s potential rebound. The CHIPS and Science Act, signed into law in August 2022, has awarded Intel tens of billions of dollars in grants and loans. While the funding process has been slow, and some awards have been reduced, this support could still benefit the company. Furthermore, the new administration’s focus on domestic manufacturing and American business, combined with the upcoming change in leadership at Intel, may create a favorable environment for the company.
A Speculative Buy at Best
While Intel’s stock appears to be rebounding from its P/S multiple’s low point, concrete evidence of the company’s progress is needed to justify a full investment. The CHIPS Act funding, new administration, and plans for a new CEO are promising but vague. As such, Intel remains a speculative buy at best. Nevertheless, 2025 could mark the beginning of another upward trend for the chipmaker, making it worth keeping a close eye on.
Consider the Bigger Picture
Before investing in Intel, it’s essential to consider the broader market landscape. The Motley Fool Stock Advisor analyst team has identified 10 stocks with monster return potential, and Intel isn’t among them. These recommendations have a proven track record, having quadrupled the return of the S&P 500 since 2002.
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