Intel: Between Political Boost and Technical Challenge

The sentiment surrounding Intel's stock has recently changed dramatically. Former skeptics are now showing interest, particularly following recent endorsements from President Donald Trump and significant investments from Nvidia. These developments raise questions about whether long-standing concerns regarding the chip manufacturer's business model should now be set aside in favor of new investment opportunities. Analysts from Bernstein expressed concerns about underestimating Intel. However, they acknowledge that Trump's political support could currently serve as a genuine price driver. The foundation of Intel's recovery narrative is the expectation of gaining new customers for chip manufacturing. This expansion is viewed by the Trump administration as essential for domestic chip production and national security interests. Nevertheless, some experts advise caution, as they regard the recent price increase as premature. Intel's stock saw an increase of almost 9% and closed on Thursday at about 34 US dollars. Reports that Apple could emerge as the next significant investor have further bolstered the positive trend. Since Nvidia's involvement, the stock has gained about 70% but remains below its 2021 highs. Analysts from Seaport Research Partners recently raised their evaluation of the stock to "neutral." They expect the upward trend might continue for now, especially through ongoing investments. However, they remain cautious regarding Intel's long-term business prospects. While Nvidia made no commitments regarding the use of Intel's foundry with its investment, a potential collaboration with Apple might not necessarily aim for that either. In a conversation with CNBC, Gene Munster from Deepwater Asset Management suggested that an investment by Apple in Intel might primarily serve to gain goodwill with the government. Many Wall Street analysts are currently exercising restraint and advocating a "hold" rating, as they anticipate a possible downturn in the stock. The current price target forecast is around 26 US dollars, approximately 25% below Thursday's closing price, underscoring the need for caution. For some analysts, the real challenge lies less in the current momentum and more in Intel's ability to produce products at the required scale, speed, and reasonable costs. Bernstein emphasizes that despite all the political support, Intel primarily needs one thing: customers.