Will Intel's Trump-Fuelled Rally Continue After 14% Jump?

Core Viewpoint - Intel's stock has seen a significant increase of nearly 14% following the election of Donald Trump, with investors optimistic about potential benefits for the company under a second Trump term, despite ongoing challenges in the semiconductor market [1]. Group 1: Stock Performance and Market Context - Intel's stock performance has been volatile over the past four years, with annual returns of 6% in 2021, -47% in 2022, and 95% in 2023, contrasting with the more stable performance of the Trefis High Quality Portfolio [1]. - The uncertain macroeconomic environment raises questions about whether Intel will underperform the S&P 500 again in the next 12 months or recover [1]. Group 2: Regulatory Environment and Manufacturing - Trump's pro-manufacturing policies could favor Intel, which has a significant fabrication presence in the U.S., unlike competitors AMD and Nvidia that rely on foundries [1][2]. - Potential regulatory support for domestic chip production, including tariffs on foreign fabrication companies, could enhance Intel's business prospects [1][2]. - Intel's foundry division may experience increased demand as companies seek U.S. suppliers to avoid duties, aligning with national security interests emphasized by Trump [2]. Group 3: CHIPs Act and Funding - The CHIPs Act, which includes approximately $39 billion in incentives for domestic semiconductor production, could benefit Intel, although there are uncertainties regarding its future under a new administration [3]. - Intel is positioned to receive up to $8.5 billion in direct funding from the CHIPs Act, with the potential for an additional $11 billion in loans [3]. Group 4: Manufacturing Technology and Product Pipeline - Intel's future success is closely tied to its new 18A manufacturing process, set to begin production in 2025, which aims to enhance competitiveness in CPUs and AI chips [4][5]. - Transitioning to the 18A process could lead to higher utilization rates and reduced costs, with the first external foundry customer expected to begin production in 2025 [5]. Group 5: Competitive Landscape - Intel has lost market share to AMD, which now holds nearly 25% of the x86 CPU market, but upcoming products like Lunar Lake and Arrow Lake could help regain competitiveness [6]. - The recovery of the PC market and new product launches may boost Intel's revenue, particularly in the AI sector, where Intel aims to challenge Nvidia with its Gaudi AI accelerators [7]. Group 6: Revenue Projections - Intel projects $4 billion in AI chip sales for 2024, with Gaudi 3 expected to contribute $500 million, indicating a potential significant revenue growth driver [7].