Intel (NASDAQ:INTC) Stock: Ready to Soar Before Catch-Up

Contrarian investors, listen up. Are you ready to buy shares of a potential contender before the big move? Intel (NASDAQ:INTC) is about to catch up, in my humble opinion, as the company has been in the mouth of the market for far too long. I am bullish on INTC stock because when things get bad and the champions are separated from the challengers, I expect Intel to rise to the top.

As a reminder, Intel is a giant semiconductor design and sales company based in the United States, but which sells microprocessors all over the world. If you are old enough, you may remember a time when Intel was the undisputed champion of American semiconductor vendors.

Yet, these days, investors seem to favor advanced micro-devices (NASDAQ: AMD), Broadcom (NASDAQ:AVGO), and, of course, the almost universally revered Nvidia (NASDAQ:NVDA). In this context, Intel appears to be the underdog or the loser. Yet if Intel goes from being a laggard to a leader, you’ll probably regret not considering a stake when the detractors and skeptics were in power.

The Reason Intel Stock Soared For No Reason

Today, the stock market was as flat as it could have been. However, Intel shares rose 6% for no apparent reason. But everything happens for a reason in financial markets, especially since Intel should have seen its stock price re-evaluated on Wall Street.

I searched extensively for the reason why INTC stock jumped on a mostly quiet trading day. The usual social media gurus were out in force, but hard information was scarce.

The Wall Street Journal attempted to make sense of the unexpected rise in Intel shares, noting a broad-based rally in stocks of “companies tied to the AI ​​chip boom.” Indeed, there was a decent rise in the stock price of Taiwan Semiconductor Manufacturing (New York Stock Exchange: TSM), Advanced Micro Devices, Broadcom and Nvidia today.

Yet Intel stock has outperformed all others. I would argue that’s because the stock has underperformed others for a very long time, and surprising things can happen when investors come to their senses and realize they’ve been unfair to a particular company.

We’ve seen the end of this movie before. Remember how Intel was the laughing stock of the chipmaking industry in 2022, when social media pundits mocked the company for losing market share to Advanced Micro Devices?

At that time, Intel stock was trading at about $25. By the end of 2023, it had doubled to $50. Amazing things can happen when the market “forgives” a company that never really committed any sins to begin with.

Some analysts see potential for Intel to catch up

As we’ll see in a moment, analysts are generally divided on Intel’s future prospects. However, some of them clearly understand Intel’s potential to regain favor with the market.

First, analysts at Melius Research seem bullish on Intel, although unlike Advanced Micro Devices, Intel will have to spend a lot of money to grow its chip foundry business. “AMD may be the ‘cleanest’ way to play these cycles, as expectations have been lowered for its AI accelerators and it lacks Intel’s ‘foundry’ advantage. However, Intel is much less favored in what could be a seasonal rally,” Reitzes explained. He gives INTC stock a Buy rating and a $37 price target.

ClearBridge Investments analysts “take a contrarian view on Intel,” which resonates with me. They “don’t think it will be an AI loser,” as some Advanced Micro Devices and Nvidia fans believe. Instead, ClearBridge Investments analysts “see an underappreciated opportunity as AI-enabled PCs proliferate in the coming quarters in the enterprise, where Intel has a strong position.”

I completely agree with this perspective, and I also agree with five-star investor Paul Franke’s take on Intel. Rather than viewing Intel’s foundry business as a money pit, he observed: “Intel is rapidly transforming into a leading U.S. foundry company for high-end semiconductor manufacturing, with government financial support.”

Moreover, Franke believes that “investor aversion to Intel has reached extreme proportions,” and he even dared to suggest that INTC stock could be a “materially better choice for your portfolio than other semiconductor picks, including Nvidia.”

Is Intel Stock a Buy, According to Analysts?

On TipRanks, INTC is rated as a “Hold” based on three “Buy”, 25 “Hold”, and three “Sell” ratings from analysts in the last three months. The average price target for Intel stock is $38.02, implying an upside potential of 11.9%.

Conclusion: Should You Consider Investing in Intel Stock?

A single-day increase in Intel stock price isn’t very significant, but it does suggest that the stock could still rise for no apparent reason. Yet, given that Intel has been undervalued for too long, there’s actually a valid reason for INTC stock to rise.

Furthermore, while Intel’s chipmaking and foundry business is going to be very expensive for a while, it should provide Intel with excellent revenue-generating opportunities in the long run. Therefore, contrarian investors who dare to go against the grain should definitely consider buying INTC stock.

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