Intel Stock Is on Track for Its Best Year Since 1996. Can Its Rally Continue Next Year?

Core Viewpoint - Intel has experienced a significant stock price increase of 107% year-to-date as of December 5, 2024, marking one of its best years in decades despite previous struggles [1][2]. Group 1: Stock Performance - Intel's stock has surged dramatically, particularly after a historic agreement with the Trump administration for a 10% government stake [4]. - The announcement of Nvidia's $5 billion investment in Intel led to a single-day stock increase of over 22%, the best performance for Intel since 1987 [6]. - The stock is currently trading at a forward price-to-earnings multiple of 57, indicating a high valuation relative to its current business performance [9]. Group 2: Business Fundamentals - Despite the stock's rise, Intel's fundamentals remain concerning, with operating losses in two of the last three quarters and a 2% decline in foundry revenue, resulting in a $2.3 billion loss [8]. - The company's market capitalization is approximately $190 billion, which is significantly lower than other major tech companies [2]. - The stock's recent performance is largely driven by speculation rather than improvements in the company's fundamentals, raising concerns about its sustainability [7][13]. Group 3: Future Outlook - Historical trends suggest that after significant rallies, Intel's stock may not continue to perform well, as seen in 1997 and 2004 when gains were followed by minimal growth or declines [10][11]. - The current rally is exceptional but may not indicate a successful turnaround for the business, leading to potential volatility in the future [12].