Chip stock Intel (INTC) has been fighting to turn things around for some time now. One of the biggest moves it has made in that respect is to augment its production processes. The 18A node was starting to look up, and there are high hopes for the 14A node as well. But new reports suggest that the 18A node may not be everything it was hoped to be. The concerns may be light, however, as Intel shares only dipped fractionally in Wednesday afternoon’s trading.
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Reports noted that Nvidia (NVDA) recently stopped tests using Intel’s 18A node to make advanced chips for the company. The tests started up, but Nvidia subsequently stopped moving forward with the testing. Not much more than that is known at this point, as reports noted that neither Nvidia nor Intel were willing to comment on the tests, and what may have gone wrong with them.
Intel, for its part, seems to be sticking to the notion that the 18A process is “progressing well.” But others believe that Nvidia is using its market leverage in a bid to soften Intel up for a takeover later. There is no evidence of that yet, though, so take it with the grain of salt required of such speculation. The silence out of both sides is certainly unnerving, though given that Nvidia has invested in Intel already, that may be the two companies engaging in a unified front.
How Tan Turned Trump
One of the biggest signs of a potential Intel turnaround was how quickly Lip-Bu Tan got President Trump on his side. Remember that, when the whole process started, Trump called Tan “highly conflicted,” calling for Tan’s immediate resignation. But one meeting later, Trump pivoted, not only supporting Tan but getting together support for the company from the government.
Further reports noted that Tan approached the meeting with Trump strategically, turning to confidantes and advisors on how to best address Trump. Then, Tan went in, armed with perspective about being an “American patriot,” and ready to offer full disclosure on his holdings in China. That led to the two engaging in dealmaking, and—based on the broad strokes revealed—ended with the United States offering cash and Intel offering equity.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on five Buys, 20 Holds and six Sells assigned in the past three months, as indicated by the graphic below. After an 77.84% rally in its share price over the past year, the average INTC price target of $38.09 per share implies 5.63% upside potential.
