It was not that long ago that chip stock Intel (INTC) was considered vastly behind the competition in artificial intelligence (AI). But new developments have since arrived, and with them, deliver a whole new investment premise. Intel could be a bigger force in AI than many expected. That notion gave investors hope, as evidenced by the fractional gain in Intel shares seen in Tuesday afternoon’s trading.
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Demand for AI chips is on the rise. Intel’s AI chips, meanwhile, were never really as popular as those found at Intel’s competitors. But with Microsoft (MSFT) signing on to get its chips produced at Intel Foundry, the idea that Intel could be a bigger force in AI than anyone might have thought possible even just a year ago is now suddenly on the table.
Granted, there is still quite a bit about the Intel / Microsoft deal that is still unknown. But with Microsoft investing in data centers in a big way, Intel serving as a supplier to that expansion effort is likely to mean a big new income stream for Intel. Further, it serves as credibility for Intel, reports note. After all, Microsoft would not turn to a complete loser in the market for supplies, especially not in artificial intelligence development.
Panther Lake Leak
In the shorter term, though, Intel also had another leak about its Panther Lake line of chips, and this leak came with a noteworthy thesis on its own. The new Core Ultra X7 358H chips will, reports note, come with Xe3 Arc GPU performance.
This is an interesting enough development on its own. While the early stats about the X7 358H line do not suggest a game-changing powerhouse in process, the performance should be solid enough to make it worth considering as an addition to future builds. Onboard graphics systems are not yet in a position to replace full GPUs—even entry-level ones—but they are certainly improving, as the X7 358H line notes.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on two Buys, 25 Holds and six Sells assigned in the past three months, as indicated by the graphic below. After a 70.09% rally in its share price over the past year, the average INTC price target of $29.48 per share implies 22.67% downside risk.
