1. Intel Corporation (NASDAQ:INTC)
Year-To-Date Loss: 57.45%
Number of Hedge Fund Investors In Q3 2024: 68
Intel Corporation (NASDAQ:INTC) is 2024’s horror story in the semiconductor industry. The close of the year is seeing a dramatic shift in the firm’s fortunes with its CEO Patrick Gelsinger having left and executives wondering whether the firm’s status as an integrated chip manufacturer is key to its future. Intel Corporation (NASDAQ:INTC) is among the few integrated chip manufacturers in the world, a model that allows it to design and manufacture its chips. However, a slowdown in the consumer PC market and a loss of technology leadership to the Taiwanese TSMC has placed the firm on the back foot and raised doubts about its future. These factors mean that Intel Corporation (NASDAQ:INTC)’s hypothesis is dependent on its 18A manufacturing process entering production in 2025 and a potential split up of its manufacturing and chip design businesses to cut costs and inject cash.
ClearBridge Investments mentioned Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter. Here is what the fund said:
“While the market environment clearly was a headwind in the third quarter, several of our large positions also faced challenging conditions, which negatively impacted results. In the information technology (IT) sector, Intel Corporation (NASDAQ:INTC) has come under additional pressure due to continued softness in the company’s core PC and server markets as well as concerns on the company’s longer-term competitive position. While Intel’s turnaround is not happening overnight, we are constructive on the outlook into 2025: the company’s product positioning should be much improved and it should be positioned to gain market share in a cyclical upswing in which it has strong earnings power. A somewhat adverse spending environment due to AI myopia has weighed on shares, but we still think the market is undershipping PCs and general servers following a COVID normalization period that saw demand get pulled ahead and then languish as companies froze IT budgets. The installed base is now getting older, and we expect a strong refresh cycle into next year. The delay is actually beneficial to Intel, whose product positioning will be all the more improved. While our investment case is not predicated on an M&A transaction, and we believe one is unlikely, the expression of interest in the company speaks to the value of the assets, which we think still trade at a meaningful discount to fair value.”
INTC is a stock that might bounce back given hedge fund sentiment. While we acknowledge the potential of INTC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than INTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
