Intel (NASDAQ:INTC), one of the founding pillars of Silicon Valley, leveraged the personal computing revolution and the growth of the Internet to establish itself as a major tech giant. However, despite its storied past, Intel has so far failed to capitalize on the explosive growth of the AI era.
Nevertheless, investor Johnny Zhang is optimistic that the company will eventually benefit from the proliferation of AI technologies, albeit not to the same extent as the current industry leaders.
The investor is also positive about Intel’s ‘5 Nodes in 4 Years’ plan, believing that the company is well-placed to capitalize on the new process node technologies it has been developing.
“I believe INTC will gradually expand its gross margin over time due to a more optimized cost structure as they approach the end of the ‘5 Nodes In 4 Years’ plan,” Zhang writes.
Additionally, the investor points to the Client Computing Group, which achieved 31% year-over-year growth last quarter (though it is expecting flat quarter-over-quarter growth in Q2). Zhang expects this “strong growth rebound” in the PC business to continue in FY2025.
Down to business, what does this all mean for investors? Moreover, Zhang points to Intel’s low valuation when compared to its historical pricing. “The stock is currently trading at 17.6x non-GAAP P/E for FY2025 and 1.36x P/B fwd, which is 37% below its 10-year average, indicating an attractive buying opportunity,” Zhang says.
All in all, seeing limited downside amidst “a secular AI tailwind and gradual improvement in its fundamentals in FY2025,” Zhang rates Intel shares a Buy. (To watch Zhang’s track record, click here)
Analysts on Wall Street by-and-large do not share Zhang’s enthusiasm. Intel stock has no fewer than 30 analyst reviews on record, and they break down to 24 Holds, and 3 Buys and Sells, each, for a Hold (i.e. Neutral) analyst consensus view. (View INTC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
