BofA’s List Of AI & Semiconductor Stocks That Fund Managers Love & Hate: 16 Stocks On The Manager Radar

13. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders In Q2 2024: 75

Section: Losing Popularity

Intel Corporation (NASDAQ:INTC) is the struggling semiconductor stock that we talked about in our introduction to this piece. While the firm is one of the biggest chip manufacturers in the world, it has struggled lately due to slow demand in the personal computing industry and a lack of exposure to the AI industry. The key to Intel Corporation’s (NASDAQ:INTC) hypothesis is its 18A chip manufacturing technology. Marketed as the most advanced technology in the world, the firm aims to not only sell its own processors built using this technology but also to target TSMC’s crown in the global contract chip manufacturing industry by offering the technology to make chips for other firms such as NVIDIA. Intel Corporation (NASDAQ:INTC) is still the biggest CPU company in the world in terms of CPU market share, but it has lost market share to AMD due to manufacturing delays and TSMC’s successful chip manufacturing operations. It is also marketing its Gaudi 3 AI chips as a low-cost solution to an industry that is feeling the pinch from NVIDIA’s higher-priced products.

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.”