AI Stock Looks Like It Will Gain More Traction
Contributed Opinion

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Good day, dear reader, as the dog days of August persist, there is much going on in the markets. If there is one problem I have, it is that sometimes being too early. Such is the case with Intel Corp. (INTC:NASDAQ), which I picked as a turnaround last October.

The stock made some false starts, so it has basically traded sideways. With recent developments, it looks like the stock will now gain traction.

I guess it is better to be too early than too late. I am still kicking myself for missing Nvidia Corp. (NVDA:NASDAQ). When the stock dropped to around $140 ($14 now post split) in 2022, I thought it corrected too much and was contemplating a write-up, but I waited to see if it declined a bit more.

That was just based on their potential in gaming. Now we know that soon after it became an AI darling, it is now up over 10-fold.

Perhaps Intel can repeat that in the next five years?

Intel Corp.

^{Recent Price - $23.55}

^{Entry Price $22.60}

^{Opinion - Buy}

Intel has secured a major vote of confidence with Japanese investment giant SoftBank (SFTBY), which agreed to invest $2B into Intel. The announcement, which sent Intel's shares rising 5.4% to $24.93/share after hours last Monday.

SoftBank will buy $2B worth of Intel stock at $23/share, which would give the Japanese firm around 2% stake, making it Intel's sixth-largest shareholder. "This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role," said SoftBank CEO Masayoshi Son. SoftBank will reportedly not seek a board seat or commit to buying Intel's chips.

It is nice to now see that Softbank agrees with my outlook.

There has also been news that the Trump administration is reportedly considering picking up a10% stake in Intel. This would make the U.S. government its largest shareholder and would require about $10.5B, which could potentially be paid for by CHIPS Act funds. Intel has already been awarded about $10.9B in CHIPS Act grants. The plan for a potential government stake is said to have emerged from a recent meeting between President Donald Trump and Intel CEO Lip-Bu.

The last development was with their Q2 results, when the stock sold off after July 24. Second-quarter revenue was $12.9 billion, flat year-over-year (YoY). Second-quarter earnings (loss) per share (EPS) attributable to Intel were $(0.67); non-GAAP EPS attributable to Intel were $(0.10).

I was surprised by how the stock reacted since it was known there would be writ-offs. At the time, I figured the worst was over.

$(0.45) impact to GAAP EPS attributable to Intel from $1.9 billion of restructuring charges, with $(0.23) and $(0.20) impact to GAAP and non-GAAP EPS attributable to Intel, respectively, from $800 million of impairment charges and $200 million in one-time period costs. 

On the chart, a break above $27 will be key, and then I would expect a quick move to $30. The stock has pulled back some on August 20, after the recent pop

The DOW has inched out new record highs over the last few days after recent new highs in the S&P 500.

It seems markets just keep going higher, but beware of September.