One of the biggest concerns surrounding chip stock Intel (INTC) was whether or not it could find customers for its new nodes. The 18A process was one thing, but the 14A process was another altogether. And now, there are signs that Apple (AAPL) is looking to step in as an Intel customer. This has galvanized the market, and sent Intel shares blasting up over 13% in Tuesday afternoon’s trading.
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We had already heard that Apple had a potential interest in picking up chips from Intel. We had also heard that some breeds of Intel chip were actually beating Apple chips in some comparisons. But the new reports suggest that Apple is currently talking to Intel about main processor creation for its line of devices in the United States.
Apple has previously relied on Taiwan Semiconductor (TSM) for its processors, and neither Apple nor Intel would discuss much about the matter. But the combination of a ramped-up demand for processors coupled with a shift away from GPUs and toward CPUs in artificial intelligence (AI) operations says that Intel is a much more vital proposition than it was even this time last year.
Too Good to be True?
But even as Intel stock is blasting through previous highs like a freight train goes through barriers of wet tissue paper, there are those who believe that Intel’s highs are simply too good to be true. Granted, Intel has bounced back from its previous levels. First quarter revenue was fantastic, and processor demand was also on the rise.
However, it is worth pointing out that Intel’s foundry business still needs a lot more revenue to counter its expenses. And certainly, Intel’s capital expenses are still massive. These factors together are forcing some to reconsider altogether, with some believing that Intel’s truest share price should be closer to $20 per share rather than its current price of over $100 per share.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on 11 Buys, 23 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 380.34% rally in its share price over the past year, the average INTC price target of $79.25 per share implies 27.22% downside risk.
