It seems like forever ago, but it’s only been a year or two since Intel (NASDAQ:INTC) was widely ridiculed on social media for losing market share to its chipmaker rivals. The future looks more promising for Intel today, however. While we’re not currently prepared to give INTC stock an outright “A” grade, we’ll give it a “B” grade and would consider it appropriate for a small-sized portfolio allocation.
Just maybe, INTC stock could end up being the comeback kid in 2024 and 2025. It depends on Intel’s ability to capitalize on the market’s fascination with artificial intelligence (AI). If the company can seize the moment and run with it, Intel stock has the potential to move higher.
Intel Goes All-In With Systems Foundry for AI Applications
Clearly, Intel is making a statement that the company is all-in on the AI trend in 2024. In what could be a game-changing move, Intel announced that it’s launching the world’s “first systems foundry for the AI era.”
Unlike some other AI-hardware manufacturers that rely on Taiwan Semiconductor (NYSE:TSM) to fabricate their microprocessors, Intel seeks to produce its own chips in multiple fabrication factories. In fact, Intel plans to build chip-fabrication factories in the U.S., Israel, Germany and Ireland.
Yet, this is notable news as Intel Foundry reveals its plans to launch a systems foundry specifically to “help customers realize their AI ambitions.” The news gets even better for Intel, however, as the company announced a very famous client.
In its press release, Intel disclosed that Microsoft (NASDAQ:MSFT) “has chosen a chip design it plans to produce on the Intel 18A process.” And separately, Reuters reported that Microsoft “plans to use” Intel’s “services to manufacture a custom computing chip.”
The U.S. Government Wants More Chips, ASAP
Now, here’s a double-shot of news reports that bode well for Intel. First of all, Bloomberg cited “people familiar with the matter” when it recently reported that the “Biden administration is in talks” to potentially award over “$10 billion in subsidies” to Intel. These subsidies would come from funds earmarked by the Chips and Science Act of 2022.
This is another sign that the U.S. government seeks to incentivize domestic AI-chip production. That’s great for Intel’s bottom line, and there’s even more recent news on this topic.
In a fresh development, U.S. Commerce Secretary Gina Raimondo made it crystal clear that America needs to continue investing in domestic semiconductor manufacturing. Raimondo even hinted at more legislation, stating, “I suspect there will have to be — whether you call it Chips Two or something else — continued investment if we want to lead the world.”
Raimondo didn’t state outright that the U.S. government should give more money to Intel. However, the Commerce Secretary did identify Intel as an “American champion company.” Moreover, Raimondo asserted that Intel “has a very huge role to play in this revitalization.”
INTC Stock: The Comeback Prospects Are Getting Stronger
Once the laughingstock of financial social media, Intel is now asserting its status as a premier chipmaker. Since Intel is going all-in on the AI-hardware trend, there’s room for the company to evolve and grow.
Besides, it’s encouraging to know that Intel has Microsoft as a client. Additionally, Intel may soon receive more financial support from the U.S. government. For these reasons, INTC stock is on our watch list and it earns a fairly confident “B” grade.
On the date of publication, Louis Navellier had a long position in MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
