One thing we knew that chip stock Intel (INTC) needed, when it started building out its foundry capabilities, was customers. Intel needed customers badly, in order to justify the surge in capital expenditure connected to that growth. It may have found exactly that, as Intel was seen talking to the likes of Amazon (AMZN) and Alphabet (GOOGL) about advanced packaging options. This news was huge for shareholders, as Intel shares blasted up over 10% in Wednesday afternoon’s trading.
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Trade AMZN with leverageBoth Amazon and Alphabet make their own chips, but typically, they outsource some parts of the process, including advanced packaging. Advanced packaging is the part of the chipmaking process that sees individual components come together to produce a more useful, coherent whole. Advanced packaging can produce system-on-a-chip packages, so-called “chiplets” that can be combined into larger chips, mobile or wearable devices, and more.
Thanks to efforts like these, Intel stands to make substantial revenue. Back in January, CFO David Zinsner noted that revenue projections had increased from nine-figure projections to sums that were “…well north of $1 billion.”
AI on the Job
Intel’s advances in advanced packaging did not come in isolation. Reports suggest that Intel is putting artificial intelligence (AI) to work on multiple fronts. Die prediction, defect images and more are all seeing advances as Intel puts machines to work to make more machines.
Intel Foundry calls it “applied intelligence at scale,” and it focuses on production systems themselves to produce desired outcomes. Intel actually has an advantage here, as it has been part of the integrated device manufacturing process for years. This allows Intel vital perspective in terms of the entire process from early development all the way up to manufacturing at volume and beyond.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on six Buys, 23 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 145.75% rally in its share price over the past year, the average INTC price target of $48.07 per share implies 16.49% downside risk.
