The tech giant Intel (INTC) had a rocky Tuesday trading session, with its shares dipping by 3.8% to close at $35 each, thus making them the leading factor pulling the Dow Jones Industrial Average down. So far in Wednesday’s session, we’re seeing much of the same – as the stock is down more than 2% today.
What’s causing all this, though? Ahead of a much-anticipated presentation to investors, Intel announced plans for significant capacity expansion in several regions. Intel has affirmed that it is ramping up new foundry capacity in Germany, Poland, and Israel, as per reports over the weekend.
But, where things get really interesting is in what this could mean for the company’s structure. One analyst suspects the only logical next step is for Intel to split into two distinct businesses.
Timothy Arcuri, an analyst at UBS, says that it’s too late for Intel to turn back from its foundry business model now. They’ve taken on too much funding from the Chips Act. And, given customer hesitation to commit to Intel foundry over competition concerns, a split from the manufacturing side and the product side is necessary.
Intel stands apart in the tech world for manufacturing its microchips in its own foundries (also known as fabs). These are high-tech facilities where silicon wafers are crafted, and transistors are etched to create microchips.
This is unlike other “fabless” chip makers like Nvidia, Apple, and Advanced Micro Devices who source their chips through other companies – like Taiwan Semiconductor Manufacturing Company. The goal is to take market share from that very company that provides chips to American tech companies. In fact, CEO Pat Gelsinger has made this his mission since taking the helm in 2021.
That being said, is all of this a red flag or a buying opportunity? Before this, INTC was trending in the right direction – up 15% in the last month. We’ve taken a look through the VectorVest stock analyzing software to help you make sense of all this and figure out your next move.
While INTC Has Poor Upside Potential, the Stock Has Fair Safety and Very Good Timing
The VectorVest system empowers you to win more trades with less work - and a lot less stress and uncertainty along the way. You’re given clear insights to help you feel more confident in your strategy through 3 simple ratings. These are relative value (RV), relative safety (RS), and relative timing (RT).
Each rating sits on its own scale of 0.00-2.00, with 1.00 being the average. Based on the overall VST rating for a stock, though, VectorVest issues a clear buy, sell, or hold recommendation - at any given time. As for INTC, here’s what we see right now:
- Poor Upside Potential: The RV rating draws a comparison between a stock’s long-term price appreciation potential (projected 3 years out), AAA corporate bond rates, and risk. And right now, the RV rating of 0.66 is poor. It’s also worth noting that the stock is overvalued, with a current value of just $20/share.
- Fair Safety: In terms of risk, INTC is a fairly safe stock - although the RS rating is a bit below the average at 0.89. This indicator is derived through an analysis of the company’s financial consistency and predictability, debt-to-equity ratio, and business longevity.
- Very Good Timing: While the price trend leading into this week was strong, it’s definitely been weakened over the past few days. That being said, INTC still has a very good RT rating of 1.28. This is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
All things considered, INTC has a fair overall VST rating of 1.00 - right at the average. This may leave you even more perplexed than before…what should you do with this stock?
You don’t have to play the guessing game or let emotion cloud your judgment. Get a clear buy, sell, or hold recommendation through a free stock analysis at VectorVest today and feel confident in your next move!
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VectorVest advocates buying safe, undervalued stocks, rising in price. While INTC has poor upside potential, the stock is fairly safe. And despite the past few days of poor performance, the timing is very good for this stock right now, too.
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