Intel (NASDAQ:INTC) Stock Edges Higher Amid New AI Memory Initiative

Chip stock Intel (INTC) has been under pressure in recent months, reflecting investor concerns about its competitive position in the AI chip market. However, today’s announcement of a new joint venture with SoftBank to develop energy-efficient memory chips has provided a modest boost to investor sentiment. As of this writing, Intel shares are up 0.5%.

The newly formed joint venture, named Saimemory, aims to develop stacked DRAM chips that consume approximately half the power of current high-bandwidth memory (HBM) technologies. This initiative is particularly significant given Intel’s previous exit from the memory business in 2022. By leveraging Intel’s technological expertise and patents from the University of Tokyo and other Japanese institutions, Saimemory plans to produce a prototype within two years, with commercialization anticipated later in the decade.

The venture specifically targets the burgeoning AI sector, as HBM is critical for AI accelerators due to its high-speed data handling capabilities. However, existing HBM solutions are expensive and energy-intensive. Saimemory’s focus on developing a more power-efficient alternative aims to address these challenges, potentially enhancing AI data center performance and sustainability.

SoftBank is leading the investment with 3 billion yen (approximately $21 million) in the 10 billion yen ($70 million) project. Other entities, such as Japan’s Riken research institute and Shinko Electric Industries, are also considering participation. The project addresses supply chain vulnerabilities, as the current HBM market is dominated by South Korea’s SK Hynix and Samsung Electronics, which face challenges like low production yields and high energy consumption.

This initiative aligns with Japan’s broader ambition to reestablish itself as a key player in the global memory chip market, a position it held prominently in the 1980s. For Intel, this venture represents a strategic re-entry into the memory sector, aligning with its broader goals to innovate in AI and data center technologies.

Is Intel Stock a Buy, Hold or Sell?

Wall Street’s current view on INTC is a mixed bag, reflecting uncertainty about its prospects. The stock holds a Hold (i.e., Neutral) analyst consensus rating, with only two recent Buy ratings compared to 25 Hold and 4 Sell ratings. That said, the $21.29 price target implies an upside potential of ~8% from the current share price. (See INTC stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.