While we have heard a lot about how chip stock Intel (INTC) has been working to become more of a chip producer itself, it recently made a move to outsource some of that operation to Tata Electronics. This suggests that Intel has a lot of faith in Tata’s operations. However, shareholders did not share that optimism, and instead sold off Intel at a rapid clip. That sent Intel shares down nearly 3.5% in Monday afternoon’s trading.
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The Tata operation is planning to put about $14 billion in investment into the operation, and for that cash create a new semiconductor fabrication plant in Gujarat state, along with an assembly and testing facility in Assam. India itself has been ramping up its efforts to be considered a power in semiconductor production, and this effort is part of that. Intel will also be working with Tata on AI PC production and scaling for both consumer and enterprise markets.
Tata Sons chairman N Chandrasekaran noted, “The Tata Group is deeply committed to developing a robust semiconductor industry in India. We are excited to collaborate with Intel, and this strategic alliance would accelerate our efforts. Together, we will drive an expanded technology ecosystem and deliver leading semiconductors and systems solutions, positioning us well to capture the large and growing AI opportunity.”
“AI Loser”?
Meanwhile, word from Wedbush analysts led by Seth Basham—who has a four-star rating on TipRanks—proved to be less than stellar news for Intel. Basham’s list declared Intel an “AI loser” along with several other names in the tech sector. All of these names were likely to fall behind in AI development, or otherwise lose ground to the technology.
Basham noted, “As we look to identify the winners in the 4th industrial revolution driven by artificial intelligence, we are cognizant of amplified disruption from tectonic shifts in behavior across enterprises and consumers. This report identifies tech companies with the highest probability of being left in the dust during the next phase of AI transformation.”
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on three Buys, 25 Holds and six Sells assigned in the past three months, as indicated by the graphic below. After a 98.99% rally in its share price over the past year, the average INTC price target of $36.07 per share implies 9.77% downside risk.
