There is mounting evidence that Intel’s (NASDAQ:INTC) new, critical chips compare very well with those of its top competitors, and the firm continues to make meaningful progress in its drive to become one of the world’s leading producers of semiconductors. Given these points, along with the quite attractive valuation of INTC stock, I continue to recommend that investors buy the shares.
Stacking Up Very Well With Its Top Competitors
In recent tests performed by a company called Stability AI, Intel’s Gaudi 2 AI chip was 56% faster than Nvidia’s (NASDAQ:NVDA) H100 offering and 2.43 times quicker than its A100 chip when it came to creating AI. And if the higher capacity of Intel’s chip is factored in, its advantage widened to 2.1 times and 3.26 times, respectively.
On the other hand, the A100 chips produced images “up to 40% faster” than the Gaudi 2 semiconductors. Still, wccftech, the respected publication that reported Stability AI’s findings, stated that “the benchmarks show that Intel’s solutions offer great value and can be seen as a respected alternative for customers who are eyeing a fast & readily available solution compared to Nvidia’s offerings.”
Moreover, according to a well-known source on YouTube, Intel’s upcoming Arrow Lake processor will be 25%-35% better than its current offering, Meteor Lake. Further, AMD’s (NASDAQ:AMD) upcoming Zen 5 chips will reportedly only be 15%-20% superior to its current offering, and Arrow Lake’s “overall raw performance” is slated to top that of AMD’s upcoming product.
On the other hand, AMD is supposed to be able to use techniques soon after Zen 5’s launch to eliminate the gap.
However, since AMD has gained a significant amount of market share at Intel’s expense in recent years due to the supposed superiority of AMD’s offerings, eliminating the disparity should be very positive for Intel’s financial results and INTC stock.
Intel’s Arrow Lake chips are due out in late 2024 or early 2025.
Continuing to Make Meaningful Progress on the Chip Manufacturing Front
Intel is meaningfully ahead of Samsung, the world’s number two chip manufacturer, when it comes to the important criteria of miniaturizing its processors. Smaller chips are more efficient than larger ones. And now Intel is reportedly using that advantage to woo Samsung’s South Korean customers. In a sign that Intel’s efforts have a good chance of succeeding to a large extent, a number of leaders in South Korea’s private sector are reportedly worried about Samsung’s vulnerability to Intel’s incursions.
Moreover, as I pointed out in past columns, Intel has signed an impressive $15 billion of deals to make chips for other firms, and Microsoft (NASDAQ:MSFT) recently agreed to buy chips from Intel. I theorized that MSFT’s decision to obtain processors from Intel would convince many other tech firms to follow suit.
Also noteworthy is that Intel expects its 1.8 nanometer chips, due out at the end of this year to be more efficient than those of the chip-manufacturing leader, TSMC (NYSE:TSM). Additionally, Intel has become the first company to place the wires on its chips to the back of the processors instead of the front. According to the firm, the change will make its offerings more efficient.
Finally, on March 7, Bloomberg reported that the U.S. government could pay Intel $3.5 billion over three years to make chips for military and intelligence programs, Bloomberg reported.
Valuation and the Bottom Line on INTC Stock
Intel’s forward price-earnings ratio of 33.8 times is quite low, given the firm’s multiple, positive catalysts and vast potential.
On the date of publication, Larry Ramer held a long position in INTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
