We recently published a list of 10 Trending AI Stocks to Watch in December. In this article, we are going to take a look at where Intel Corp (NASDAQ:INTC) stands against other trending AI stocks to watch in December.
Jared Cohen, Goldman Sachs president of global affairs, co-head of the Goldman Sachs Global Institute, said while talking to CNBC in a latest program that amid rising data center-driven energy demand because of AI, the US would need to collaborate with other countries via “diplomacy.”
“If you look at data centers for cloud workloads versus data centers for AI workloads, data centers for AI workloads require ultra-high density. They need a concentrated power source, and so intermittent power like wind and solar doesn’t fit the bill. You need base load power, so I think nuclear, coal, and natural gas are necessary, and we have plenty of that in the US. The problem is we can’t transport it from where it is through multiple jurisdictions because of the ‘not in my backyard’ issue. So, the US is going to need some kind of overflow option if it wants to continue leading in this space. There’s not a single geography that I would say represents a panacea to this problem.”
Answering a question about whether the return to relatively cheaper and reliable energy sources like coal could satisfy the AI-driven energy demand, the analyst said the US would still need to look beyond just relying on its own sources because the need for power is huge.
“We’re going to have to probably bring another 35-plus gigawatts of power online relative to the 17 gigawatts of power that are already online feeding these data centers in just the next couple of years. That’s not enough, that’s not enough time. So, you know, the US is going to continue to lead in the space, but it’s not going to be able to lead on its own.”
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For this article we picked 10 AI stocks that are getting investors’ attention on the back of latest news. With each stock we have mentioned the number of hedge fund investors. 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)
Number of Hedge Fund Investors: 68
Last month, Bernstein’s Stacy Rasgon, while talking to CNBC in a program ahead of Intel Corp (NASDAQ:INTC)’s earnings, explained why he is worried about Intel shares:
“I mean, we’ve got issues in the PC market. We’ve got a CPU channel that’s stuffed full in servers. Their competitors are still taking a good amount of share, and they don’t really have any AI story to speak of to help make up the difference. Now, I’m starting to get more and more worried about the trajectory for gross margins. They’ve kind of been suggesting that as they ramp some of their new products, which actually have a lot more outsourced content, it hurts the margins. They’ve been suggesting that may actually be an incremental headwind to margins as we get into next year. So, all that, and then you couple that with everything else around the process roadmap, burning cash, and everything else—it doesn’t feel like a good situation to be in. Clearly, they’re in a tough spot.”
In 2025, Intel Corp (NASDAQ:INTC) is expected to generate $4–$5 billion in operating cash flow against a projected $20–$23 billion in capital expenditures. Intel reported $5.1 billion in operating cash flow and spent $18.1 billion in the first nine months of this year.
Intel bulls are linking their hopes with Intel Corp (NASDAQ:INTC)’s foundry business. But the segment posted weak results in both the second and third quarters, with a third-quarter revenue drop of 8% and an EBIT loss that grew to $5.8 billion. Once seen as a potential competitor to Taiwan Semiconductor Manufacturing (TSM), Intel’s steep third-quarter decline raised serious doubts about its manufacturing competitiveness.
ClearBridge Large Cap Value Strategy stated the following regarding Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter:
“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.”
Overall, INTC ranks 8th on our list of trending AI stocks to watch in December. While we acknowledge the potential of INTC, our conviction lies in the belief that under the radar 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.
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Disclosure: None. This article is originally published at Insider Monkey.
