Intel (NASDAQ: INTC) buyers are having a fairly nice week to date — even when Intel inventory is not but exhibiting it. The Wall Road Journal reported Wednesday that the U.S. Commerce Division awarded Intel $8.5 billion in subsidies to assist defray the price of increasing semiconductor manufacturing in Arizona, New Mexico, Ohio, and Oregon.
This implies absolutely 16% of the $53 billion in authorities cash approved by the 2022 “Chips Act” will go to Intel alone. International Equities Analysis analyst Journey Chowdhry is trying on the information positively and, on Thursday, he raised his value goal on Intel inventory to a giant, fats $100.
Is Intel inventory a purchase?
Contemplating Intel inventory prices roughly $42 immediately, that is an enormous vote of confidence. Chowdhry’s value goal implies this $182 billion firm will greater than double in worth over the subsequent 12 months or so. What has him so enthused?
Nicely, $8.5 billion in free authorities cash is an effective begin. However past that, Chowdhry says Intel is the one firm immediately that may construct the form of power-efficient “subsequent technology” 18A and 14A synthetic intelligence processors wanted to maintain the AI revolution going. (“18A” refers to each the scale of the processor — 1.8 nanometers — and likewise its 3D stacked structure).
Whereas different corporations resembling Superior Micro Gadgets and Taiwan Semiconductor Manufacturing are additionally exploring 3D stacked chips, Intel seems to be the chief. Mixed with smaller chips and better energy effectivity, 3D structure could also be sufficient of a differentiator that, when a little bit of free authorities cash is added, Intel can flip itself round this 12 months, then outgrow its rivals in years to return.
That stated, there are dangers. For one, $8.5 billion solely covers about half of the $14.3 billion in money Intel spent final 12 months on enlargement — and free money movement is predicted to stay unfavorable by 2026. $100 a share can be an aggressive value goal for a corporation that earned solely $0.40 per share final 12 months, implying a trailing P/E ratio of 250!
Caveat investor.
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Wealthy Smith has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Superior Micro Gadgets and Taiwan Semiconductor Manufacturing. The Motley Idiot recommends Intel and recommends the next choices: lengthy January 2023 $57.50 calls on Intel, lengthy January 2025 $45 calls on Intel, and quick Could 2024 $47 calls on Intel. The Motley Idiot has a disclosure coverage.
Is Intel Inventory Going to $100? 1 Wall Road Analyst Thinks So. was initially revealed by The Motley Idiot
