Why Intel Stock Nearly Tripled the S&P 500's Gain in December

Intel (INTC), which was also considered an underrated chip player throughout 2022 and the first half of 2023, has suddenly programmed itself back into Mr. Market’s favor.

According to Yahoo Finance data, Intel shares rose 13% in December, compared with a 4.5% gain for the S&P 500. The company’s main competitor, Nvidia (NVDA), saw a slight slowdown after a stormy year Stock and saw an increase of 5.3% compared to the previous month, while shares of AMD (AMD) rose 18%.

Shares of Intel are up 91% year-to-date. In 2022, the stock plunged 48% due to a series of quarterly disappointments and product setbacks.

Despite the impressive price increase, Intel’s market capitalization is still well below that of its main competitors, which continue to be viewed by investors as the leaders in the AI ​​chip race.

Intel’s market cap is currently $212 billion, lower than AMD’s $231.7 billion and Nvidia’s $1.22 trillion, according to a comparative analysis by Yahoo Finance.

At this point, Intel shareholders will likely take the profits after several years of product delays and deep restructuring.

The company’s strong market performance in December reflects several factors.

On Tuesday, the Israeli government awarded Intel a $3.2 billion grant for a $25 billion chip factory the company plans to build in southern Israel. The investment – part of CEO Pat Gelsinger’s efforts to build new factories to make chips for other semiconductor companies – is reportedly the largest ever made by a company in Israel.

Intel currently employs 11,700 people in Israel. The company says it has invested more than $50 billion in the country over the past 50 years.

In the meantime, Intel has some good product news for a change.

A week ago, Intel unveiled a series of AI-focused products and services. On display was Gaudi3, an artificial intelligence chip for generative AI software. The chip will officially hit the market next year.

Intel also unveiled its Core Ultra processor, which will target the emerging AI PC market.

The story goes on

Intel CEO Pat Gelsinger participates in an interview with Reuters in Wroclaw, Poland, June 16, 2023.  REUTERS/Karol BadohalIntel CEO Pat Gelsinger participates in an interview with Reuters in Wroclaw, Poland, June 16, 2023.  REUTERS/Karol Badohal

Intel CEO Pat Gelsinger participates in an interview with Portal in Wroclaw, Poland, June 16, 2023. Portal/Karol Badohal (Portal / Portal)

The Street is confident that the new chips will lead to higher sales and profits in 2024 amid the AI ​​boom.

“The team is uniquely positioned to support the development of AI technology/capabilities for the various endpoints due to its broad computing product portfolio, software solutions, extensive ecosystem and research and development scope,” said JPMorgan analyst Harlan Sur in a note to customers.

Gelsinger told Yahoo Finance Live that he is ramping up production of these new chips like “crazy” (see video above) to become the dominant player in the artificial intelligence space.

“Only a few companies in the world can do this, and only one in the Western world, and that is Intel. So we still see a lot of market value creation ahead of us. “We are still significantly undervalued compared to many colleagues, even though we have made good progress this year,” Gelsinger added. “That’s why I see many opportunities for us to create added value for our customers and for our shareholders.”

Investors seem to be betting on just that.

Brian Sozzi is Editor-in-Chief of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].

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