We recently compiled a list of the 10 Best Most Active Stocks To Invest In Now. In this article, we are going to take a look at where Intel Corp. (NASDAQ:INTC) stands against the other active stocks.
Are Additional Rate Cuts a Necessity?
The economic landscape is currently marked by mixed signals. The Fed has indicated the potential for additional rate cuts due to weaknesses in the manufacturing sector, despite signs of recovery. While the overall economy remains strong, currency dynamics have shifted, with the US dollar weakening and the euro strengthening. Interest rate yields have fluctuated, suggesting potential changes in investor sentiment. Amidst this complex environment, the Dow continues to hover near record highs, reflecting cautious optimism among market participants.
As stakeholders navigate these developments, they will need to carefully consider how they may influence investment strategies and market behavior in the coming months. CNBC’s Rick Santelli recently covered this situation, which we talked about in our article on the 10 Best Performing Stocks in 2024. Here’s an excerpt from it:
“Chicago Fed President Austan Goolsbee has indicated that many more rate cuts may be necessary over the next year due to signs of weakness in the manufacturing sector. CNBC’s Rick Santelli, who was reporting on September 23, noted that while manufacturing has faced challenges, there are indications it might be recovering slightly, as evidenced by a recent production increase of 0.8%.
He referenced comments…. that the economy is experiencing strong growth and robust consumer spending, which he believed contradicted the concerns raised by Goolsbee. Santelli pointed out that the Dow Jones Industrial Average is currently at all-time highs, suggesting that market sentiment remains positive despite underlying economic weaknesses.
Further discussing the economic landscape, he remarked on the currency markets, noting that the US dollar has fallen to its lowest level since March 2022. In contrast, the euro has reached its strongest level since April 2022. This shift in currency dynamics reflects broader economic trends…”
However, a lot of analysts do not have an opinion as nuanced as that of Santelli. For instance, Michael Kantrowitz, Piper Sandler’s chief investment strategist joined CNBC’s ‘Power Lunch’ on September 23 to discuss why smaller businesses and consumers need the benefits from more rate cuts.
In a conversation regarding the challenges facing US car manufacturers, it was noted that the biggest threat they encounter is the influx of Chinese automobiles into the US market. This concern contrasted with the insights from the President of the Bank of Chicago, who stated that ongoing rate cuts will continue to benefit smaller businesses and consumers who are currently adjusting to higher interest rates. Kantrowitz emphasized the significant impact that lower interest rates can have on the consumer economy, particularly given the substantial amount of debt tied to credit lines and credit cards. As adjustable-rate mortgages decrease, this easing of financial conditions is expected to be beneficial.
Kantrowitz pointed out that before last week, financial conditions had been easing primarily for larger corporations, as evidenced by the S&P 500, which did not require a rate cut. However, small businesses and consumers, who are more closely tied to the prime rate set by banks, had not experienced similar relief until recently. The last report indicated that small businesses were paying an interest rate of 9.5% for 3-month borrowing. This recent easing represents a crucial first step for Main Street, although the strategist believes further cuts are necessary.
He noted a broadening market trend following the July 11 CPI report, highlighting that commercial real estate has emerged as one of the best-performing sectors this quarter, alongside utilities and regional banks. However, it was emphasized that while rate cuts can benefit certain areas indirectly, such as those affected by lower tenure rates, they do not necessarily provide direct support.
Looking ahead at interest rates, there was speculation about how low they might go in the next year. Kantrowitz suggested that policy rates could indeed fall into the 3% range but cautioned that markets might be overly aggressive in their expectations. The anticipated rise in unemployment will play a critical role in shaping equity and fixed-income markets; however, if unemployment increases at a slow and steady pace, as it has been, it may not pose significant challenges to market stability.
Kantrowitz’s opinion reflects a cautious optimism regarding economic conditions as stakeholders face uncertain conditions while keeping an eye on interest rates and their broader implications for various sectors within the economy.
Methodology
We sifted through Yahoo Finance’s list of the most active stocks that are experiencing high trading volumes. We looked at the top 15 stocks to find the ones that were the most popular among elite hedge funds. We then narrowed down our list to the 10 stocks with high trading volumes and that were the most popular among hedge funds. The stocks are ranked in ascending order of their trading volumes, as of September 23.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician soldering components for a semiconductor board.
Intel Corp. (NASDAQ:INTC)
Volume: 48.896 million
Average Volume (3-Month): 80.49 million
Number of Hedge Fund Holders: 75
Intel Corp. (NASDAQ:INTC) is a multinational corporation and technology company that designs, manufactures, and sells computer components and related products for business and consumer markets, such as semiconductors, and integrated circuits, among others. It’s known for its x86 microprocessors, which are used in a wide range of computers and devices.
The company is focused on using its chips to power AR devices. Earlier this year, its Japanese division partnered with 14 domestic firms to establish a research body focused on automating back-end chipmaking processes as Japan and the US work to strengthen their chip supply chains.
Intel Corp. (NASDAQ:INTC) has received up to $3 billion in direct funding under the CHIPS and Science Act for the Secure Enclave program, in addition to an already $8.5 billion federal grant. The funding for the former focuses on projects for US defense, while the latter has gone into semiconductor manufacturing and research projects in Arizona, New Mexico, Ohio, and Oregon.
In Q2, it introduced its new Xeon 6 processors with performance cores and AI accelerators, primarily targeted toward enterprise AI systems for high-performance, cost-effective AI infrastructure. The Intel Xeon 6 processor offers double the performance of its predecessor, while the Intel Gaudi 3 AI Accelerator is optimized for large-scale generative AI.
Despite that, the company recorded a 0.9% year-over-year revenue decline in this quarter, with the total revenue amounting to $12.83 billion. To combat that, the company announced it was cutting 15% of the 125,000-strong workforce and suspended dividends to cut spending and streamline the company. Even with layoffs, the inventory problem won’t be resolved soon because the company has 137 days of inventory, much higher than the industry average of 90 days.
Its strategic focus on reducing costs and improving operational efficiency positions it well for future growth. Despite recent challenges, its strong market presence in semiconductor chip manufacturing and its focus on developing innovative technologies for smart devices suggest a promising outlook for the company.
Ariel Global Fund stated the following regarding Intel Corporation (NASDAQ:INTC) in its Q2 2024 investor letter:
“Alternatively, several positions weighed on performance. One of the world’s largest semiconductor chip manufacturers by revenue, Intel Corporation (NASDAQ:INTC), underperformed in the period on news of a longer than expected turnaround in profitability within the Foundry business. This was exacerbated by disappointing near-term guidance due to a weakening demand environment signaling an extended replacement cycle. We view the quarter as a temporary trough that should dissipate as we see signs of a cyclical recovery for personal computers (PCs) and central processing units (CPUs), driven by the Windows 11 upgrade. In our view, the market is overlooking the progress Intel is making to advance its manufacturing process. Not to mention, the company’s efforts to serve as a viable second source foundry partner of leading-edge silicon. We believe the separation of the design and manufacturing businesses will be a key catalyst in unlocking improved financial performance while also enhancing the competitiveness of the foundry business.”
Overall INTC ranks 2nd on our list of the most active stocks to buy. While we acknowledge the potential of INTC as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high 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: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
