We recently published a list of 10 AI News and Analyst Ratings You Should Not Miss. Since Intel Corporation (NASDAQ:INTC) ranks 8th on the list, it deserves a deeper look.
While everyone is talking about rate cuts, some analysts are questioning whether it was necessary even to start cutting rates at this time. Latest data released on Tuesday showed retail sales in the US rose while Wall Street analysts were expecting to see a decline. Oksana Aronov, JPMorgan Asset Management head of market strategy for alternative fixed income, said while talking to CNBC that rate cuts are not even warranted as she thinks there are no signs of broader weakening except for the labor market.
Aronov said cutting rates would “loosen” the financial conditions further. The analyst said that about 14 months ago, everyone was looking at the CPI that was clocking in at 3% and expected the metric to fall to 2%. But even after all these months, CPI year over year is at 2.9%. She said that the Fed should move carefully and the 2% inflation target would be “elusive” because fiscal spending will continue to rise.
AI investors are however looking beyond this debate and already positioning to pile into more growth stocks amid the beginning of the rate-cut cycle.
For this article, we picked 10 buzzing AI stocks and discussed the latest news around them.
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 laptop
Intel Corp (NASDAQ:INTC)
Number of Hedge Fund Investors: 75
New Street Research has said in a latest report that the AI PC demand companies like Intel Corp (NASDAQ:INTC) are counting on may not be that strong after all.
The report said that in the second quarter of 2024, PC shipments rose just 3% year-on-year. For the full year, PC shipments are now expected to remain flat compared to last year. Even with an upcoming PC refresh cycle, the International Data Corporation only forecasts a 5% increase in 2025.
“In notebooks, AMD gained 1pt of unit share with the continued ramp of Ryzen 7000-8000 (4nm), while Alder Lake (Intel 7) and older SKUs declined, as inventories built up during 1Q flushed, offsetting the Meteor Lake (Intel 4) ramp,” said New Street analysts, led by Pierre Ferragu. “Intel ASPs were down 2% QoQ vs. up 13% at AMD, resulting in AMD revenue share up 3pts.”
“Inventory movements could explain some of it, but the reality is that Intel Corp (NASDAQ:INTC) is still losing share despite being back at the leading edge in notebooks.”
The report said most of the demand is driven by the enterprise customers and consumer-related demand is slow.
New Street Research notes that inventories for PC CPUs are again high, and further increases could result in weaker demand heading into 2025.
The firm also sees little evidence of AI PCs driving demand higher. “The supply chain wants to believe in an AI-driven refresh cycle, but we see no evidence of it,” Ferragu said. “Gen AI will revolutionize the user experience for PCs and personal devices more broadly, but the revolution won’t be hardware-driven and won’t create a near-term product cycle, in our view. Killer use cases are still quite remote and will gain adoption through software.”
Despite this, New Street believes AMD is well-positioned to benefit from AI growth in 2025, particularly due to its MI300 GPU series.
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, Intel Corporation (NASDAQ:INTC) ranks 8th on Insider Monkey’s list titled 10 AI News and Analyst Ratings You Should Not Miss. While we acknowledge the potential of Intel Corporation (NASDAQ:INTC), 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 INTC stock that is more promising than AI 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.