It seems chip stock Intel (INTC) might owe a debt of gratitude to former CEO Pat Gelsinger, as the 18A process he started—regarded by some as a “bet-the-company” initiative—is actually starting to bear fruit. Indeed, reports note that Microsoft (MSFT) has signed a “decisive contract” with Intel on this one, and more interest is coming in. That was enough for shareholders, who sent shares up over 3.5% in Thursday afternoon’s trading.
Early reports are calling this Intel Foundry’s “iPhone Moment,” and not only is Microsoft interested, but reports note that Google (GOOGL) and Nvidia (NVDA), among others, are looking to get in on the action as well, having Intel produce processors for them with the new 18A process. In fact, some even believe that Intel’s 18A could be the perfect American-made counterpart to Taiwan Semiconductor (TSM) and its N2 process.
As such, Intel is ramping up its production operations. We know about the Ohio plant, of course, but two new fabrication plants, or fabs, are set to start up in Arizona, as well as expansion of packaging operations in New Mexico. Further, a new logic and foundry plant is slated for Oregon, and both Ireland and Israel are set to fire up new production. Intel might actually need all this new production, especially given how many potential customers are sitting up and taking notice.
Arrow Lake Fire Sale
Meanwhile, for some of Intel’s older chips—particularly the Arrow Lake line—prices are coming down. The 265K Arrow Lake processor, geared mainly toward desktops, has been officially cut, noted recent reports. It is considered a “mid-range” chip, and though it is not exactly the best for gaming, there are still plenty of positives associated with the line.
But with Intel actively price-cutting, it suggests that Intel may be building a strategy that gets it some of its lost market share back. Offering mid-range processors at good prices could get a lot of interest going. This is particularly true in economically-uncertain times, where staying home and playing video games sounds like a pretty good weekend that does not cost an arm and a leg.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 29.67% loss in its share price over the past year, the average INTC price target of $21.29 per share implies 1.28% upside potential.
