Intel Sinked Again Today: Does Artificial Intelligence (AI) Make This Troubled Stock a Buy?

Intel (INTC -6.12%) Shares of the chip company suffered another day of selling on Thursday. The company’s stock ended the session down 6.1%, according to data from S&P Global Market Intelligence.

Intel lost ground again as investors speculated that the company would abandon plans to build two semiconductor manufacturing plants in Germany. There has been no official announcement that the construction plans have been abandoned, but investors have remained in the dark about the project.

The two factories are expected to be operational in 2027 and would cost about $33 billion to build, a third of which would be covered by the European Union. And while Intel hasn’t provided much information about the future of the factories, Semiconductor Manufacturing in Taiwan announced earlier this week that it had started construction of a new $11 billion manufacturing plant in Germany, with the EU covering half the costs.

After today’s pullback, Intel stock is once again trading slightly above its 10-year low. Is the struggling company an underappreciated artificial intelligence (AI) company or an aging behemoth that will fail to deliver profits to investors?

Betting on Intel’s AI Future Means Embracing Uncertainty

Improving Intel’s manufacturing capabilities has become a major economic and national security issue for the United States, the European Union, and other aligned countries. While there is a good chance the company will receive additional government funding to build new factories, the push to expand its contract manufacturing business comes at a difficult time. Building and maintaining factories is capital-intensive, and Intel is in the midst of a massive cost-cutting campaign that has included laying off 15% of its global workforce, suspending its dividend, and selling investments.

Efforts to become a leader in high-performance processors for data centers have yet to bear fruit, and the recent introduction of AI PCs has actually created margin pain instead of being the profit booster some expected. AI is not yet generating profits for the PC and server businesses, and the manufacturing unit is racking up high costs. Intel has recently sent a barrage of bad news to investors, and there is little visibility into the success of the company’s turnaround strategy.

With its stock down 60% year-to-date and down 71% from its 10-year high, the semiconductor company could appeal to risk-tolerant investors looking for contrarian stocks with explosive upside potential. Intel still benefits from strong business relationships, and government support could eventually help it build a powerful contract manufacturing business. But if you’re waiting for signs that a comeback is on track and that Intel will be an AI winner, the company hasn’t given them yet.