'…One Something of Volume…' Intel Stock (NASDAQ:INTC) Slips as it Looks for Customers

Globe and Mail

3 days ago

While we know that chip stock Intel (INTC) has been pushing, and pushing hard, to build a lot of new chips through its foundry operations, the problem is a matter of what to actually do with those chips when they are built. Intel is on the hunt for customers, and the search is proving a bit more difficult than expected. And Intel's shareholders are starting to get concerned, again, as shares slipped fractionally in Thursday afternoon's trading.
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Basically, noted The Futurum Group CEO Daniel Newman, Intel needs at least one major customer to get people to believe it has a future in the foundry front. 'One Nvidia (NVDA), one Qualcomm (QCOM), one Apple (AAPL), one something of volume that really shows this meaningful commitment to the fab to build significant volume would really change the whole narrative,' Newman noted.
But perhaps worse for CEO Lip-Bu Tan, Newman noted, is that there are a lot of problems that were there before Tan's tenure, as the foundry business takes a lot of capital to start and has a long runway to success—we had heard earlier that Intel should break even on the foundry operations in 2027—and Intel itself faces fundamental challenges like a growing reliance on graphics processing unit (GPU) chips over central processing unit (CPU) chips, particularly in artificial intelligence (AI) applications. Thus, the call for one big customer to help validate the unit.
A Loss of Face in AI
Even as Intel faces concerns that it is irreparably behind in AI advances, it may have just proven as much. Reports noted that Intel lost a few of its executives to join a coalition of others that are setting up AI chip startups in India. A coalition of four went to Bengaluru to set up Agrani Labs, which is developing its own AI chips in-house, and working with Peak XV partners to land $8 million.
But Intel is not exactly out of that fight; Intel's CEO, Lip-Bu Tan, actually put some cash into one such effort staged by former Texas Instruments (TXN) employees, Bodhi Computing. The rise of firms in that field, operating out of India, makes it clear that the AI chip market is one that is likely to grow substantially in short order. But the question that remains: will Intel ultimately be left behind?
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 32.53% loss in its share price over the past year, the average INTC price target of $21.29 per share implies 5.37% upside potential.
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