Why Intel Stock Slumped on Tuesday


Shares of Intel (NASDAQ: INTC) tumbled to kick off the new year, falling as much as 5.6%. As of 3:35 p.m. ET, the stock was down 5.19%.

Part of what dragged the semiconductor company down was the stock market’s broader decline to start the year. A Wall Street analyst also added fuel to the fire. Despite issuing a higher price target, the analyst doesn’t view Intel as one of a select group of “attractive” chip stocks.

Less downside for Intel

Stifel analyst Tore Svanberg maintained a hold rating on Intel, though he increased his price target to $45 from $38. While that might seem like good news at first glance, it suggests an additional downside of 10% compared to Friday’s closing price.

The analyst laid out criteria for the semiconductor stocks he views as “attractive” heading into 2024. Svanberg believes this “ideal mix” includes stocks down from their recent highs, with strong balance sheets, and well situated to benefit from the ongoing artificial intelligence (AI) revolution — but Intel didn’t make the cut.

The focus on AI

To add insult to injury, the analyst was clear about his top pick among AI stocks — citing Nvidia as the top dog. Svanberg went so far as to call Nvidia his “best idea” for AI and accelerated computing. He went further, saying Nvidia “presents a compelling opportunity ahead of the next phase of the company’s AI cycle, software and services.”

Not everyone agrees with his decision to snub Intel. Late last week, Argus analyst Jim Kelleher maintained a buy rating on Intel shares and raised his price target to $60 from $42. For investors, this suggests a potential upside of 19% compared to Friday’s closing price. Kelleher cited Intel’s position in the data center and niche markets, such as the Internet of Things (IoT) and applications acceleration, as reasons to buy.

Despite soaring in 2023, Intel stock has been essentially flat over the past five years. The stock remains something of a mixed bag, and there are, in my opinion, far better ways to play the AI revolution.

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Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

Why Intel Stock Slumped on Tuesday was originally published by The Motley Fool

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