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Chipmaking giant Intel (INTC) has had a rough go lately. Intel stock has fallen hard after its last eight quarterly earnings reports. However, with new leadership at the helm, some investors may be wondering: Is INTC stock a buy right now?
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The Santa Clara, Calif.-based company ruled the personal computer era thanks to its close partnership with Windows software maker Microsoft (MSFT) in what was called the Wintel alliance. But the growth of smartphones and other computing platforms diminished its influence.
In 2021, Samsung overtook Intel to become the world’s No. 1 semiconductor vendor by revenue, research firm Gartner said. Samsung had 13% market share, compared with 12.5% for Intel. Last year, Intel had the slowest growth rate among the top 25 vendors at just 0.5%.
Intel has been losing market share to rival Advanced Micro Devices (AMD) in central processing units, or CPUs, for PCs and servers. And Intel customers Apple (AAPL) and Microsoft are switching to chips they’ve designed themselves.
Intel Invests In Manufacturing
In February 2021, Pat Gelsinger, previously chief executive at VMware (VMW), took over as CEO at Intel. Gelsinger earlier served as Intel’s chief technology officer.
Gelsinger has vowed to return Intel to a leadership position in semiconductor manufacturing. The company has fallen behind chip foundry Taiwan Semiconductor Manufacturing (TSM), which is already mass producing chips at 5-nanometer scale. Intel’s current state-of-the-art chips are at 10-nanometer scale. Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.
On March 15, Intel disclosed plans to invest as much as 80 billion euros, or about $85 billion, in the European Union over the next decade. The investments would span research and development, manufacturing, and packaging technologies. Intel stock rose 0.9% on the news.
On Jan. 21, Intel announced plans to invest more than $20 billion to build two leading-edge chip factories near Columbus, Ohio. Construction will start this year with production expected to come online in 2025. Last year, Intel announced major expansions at its factories in Arizona and New Mexico.
“Intel is bringing leading capability and capacity back to the United States to strengthen the global semiconductor industry,” Gelsinger said in a news release about the Ohio factories. INTC stock was flat on the news.
On Feb. 15, Intel announced a deal to buy Israel-based chip foundry Tower Semiconductor (TSEM) for $5.4 billion in cash. Intel stock rose 1.8% on the news.
Intel Stock Fundamental Analysis
Late on April 28, Intel edged above analyst expectations for the first quarter, but it missed views with its second-quarter outlook. INTC stock dropped 6.9% the day after the report.
Intel earned an adjusted 87 cents a share on sales of $18.35 billion in the March-ended quarter. Analysts polled by FactSet expected Intel earnings of 78 cents a share on sales of $18.33 billion. On a year-over-year basis, Intel earnings dropped 35% while sales dipped 1%.
For the current quarter, Intel predicted adjusted earnings of 70 cents a share on sales of $18 billion. Wall Street was looking for earnings of 80 cents a share on sales of $18.34 billion in the June quarter.
However, on June 7, Intel executives commented at a conference that the near-term business outlook is worsening.
The next potential catalyst for Intel stock could be the company’s June-quarter earnings report, due in late July.
INTC Stock Technical Analysis
Intel stock hit a 19-year high of 69.29 in January 2020 ahead of the coronavirus stock market correction. INTC stock notched its all-time high of 75.81 way back in August 2000 around the time of the dot-com boom and bust.
In mid-March 2021, Intel stock touched a buy point of 65.21 out of a loose, year-long double-bottom base, according to IBD MarketSmith daily charts. But INTC stock has a poor track record of late for sustaining gains after stock breakouts. Intel stock climbed as high as 68.49 in early April 2021 before declining.
Intel stock has a weak IBD Relative Strength Rating of 32 out of 99. The best growth stocks typically have RS Ratings of at least 80. The Relative Strength rating shows how a stock’s price performance stacks up against all other stocks over the last 52 weeks.
INTC stock has a subpar IBD Composite Rating of 34 out of 99. IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Is Intel Stock A Buy Right Now?
Intel stock is not a buy right now. It needs to form a new base in the right market conditions before setting a potential buy point. Check out IBD’s Big Picture column for the current market direction.
Intel stock ended the regular session June 15 at 38.65.
In addition, INTC stock is trading below its 50-day moving average line, where it has faced resistance. It’s also beneath its 200-day moving average line.
Intel stock lacks the qualities that make a CAN SLIM stock, under IBD trading principles. Those qualities include consistent profit growth and market leadership.
INTC stock ranks No. 21 out of 31 stocks in IBD’s Electronics-Semiconductor Manufacturing industry group, according to the IBD Stock Checkup. That means there are much better stocks to investigate in the group.
The chip manufacturing group ranks No. 125 out of 197 industry groups that IBD tracks. Choosing highly rated stocks from leading industry groups in a confirmed stock market uptrend generally increases your chances of making profits in growth stocks.
To find the best stocks to buy or watch, check out IBD Stock Lists as well as IBD’s Leaderboard, MarketSmith and SwingTrader platforms.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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