UBS’ Bottom Quant Stocks In AI, IT, Healthcare & Others: 29 Stocks In All Sectors

24. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Investors In Q2 2024: 75

Sector: Information Technology

Intel Corporation (NASDAQ:INTC) is the beleaguered American chip manufacturing giant whose shares are down 45% year to date. Two factors are driving the firm’s troubles. First, a slowdown in the personal computing market has hit Intel Corporation (NASDAQ:INTC)’s chip sales hard at a time when it is aggressively investing in new chip manufacturing technologies. Second, the firm has not only lost its chip manufacturing technology lead to TSMC, but has also failed to capture the booming global demand for contract chip manufacturing. Consequently, these two factors will also drive Intel Corporation (NASDAQ:INTC)’s hypothesis moving forward. The firm is currently all in on the 18A chip-making technology. Successful execution of its self-set manufacturing timelines coupled with strength in the contract chip manufacturing business could create tailwinds and vice versa.

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.”