Shares of processor giant Intel (NASDAQ: INTC) jumped another 25.9% in January, according to data from S&P Global Market Intelligence. The January surge was all the more impressive considering Intel had already rallied 84% in 2025. Yet, whereas the 2025 surge largely reflected a change in sentiment amid the appointment of new CEO Lip-Bu Tan and investments in the company from the U.S. government, Nvidia, and Softbank, January's surge was based on the release of an actual new product: Intel's Panther Lake ...

Core Viewpoint - Intel's stock has significantly outperformed this year due to CEO Lip-Bu Tan's strategic vision, which has renewed investor confidence in the company's competitive stance in the global AI market [1] Group 1: Company Performance - Under Lip-Bu Tan's leadership, Intel has secured billions in private and federal investments to advance its foundry ambitions [1] - Despite a strong year, Intel shares are still down approximately 50% from their pandemic high, indicating ongoing structural and execution risks [2] Group 2: Market Dynamics - Recent setbacks for Intel include Nvidia's decision to scrap plans for producing advanced chips using Intel's 18A node, but long-term prospects remain positive due to high demand for chips [3][4] - Major companies like Apple, Qualcomm, and AMD are exploring alternatives due to unprecedented AI-driven demand, which reinforces Intel's role as an auxiliary capacity provider [3] Group 3: Future Outlook - The upcoming "14A" process, expected to enter volume production in 2028, is seen as a critical inflection point for Intel, particularly in competition with companies like Nvidia and Apple [5] - Intel shares are currently valued at just over 3 times sales, making them attractive compared to Nvidia's valuation of over 35 times sales [5] Group 4: Analyst Sentiment - Wall Street analysts maintain a consensus rating of "Hold" for Intel shares, with a mean target price of nearly $37, which aligns with the current trading price [7]

Core Viewpoint - Intel's stock is experiencing a decline due to Nvidia's decision not to manufacture chips using Intel's 18A node, despite Intel's claims of progress and interest in its next-gen 14A node [1][2]. Group 1: Intel's Current Situation - Intel's stock is trading approximately 0.52% lower at $36.16 following a report that Nvidia will not use its 18A manufacturing process [1]. - An Intel spokesperson stated that the 18A node is "progressing well" and there is "strong interest" in the upcoming 14A node [1]. - Veteran analyst Stephen Guilfoyle noted a bearish reversal pattern in Intel's stock since early August, indicating potential concerns about its future performance [3]. Group 2: Analyst Opinions - The consensus rating for Intel's stock is a hold, with 20 analysts recommending this, 6 suggesting a sell, and 5 advising a buy, while the average target price is $38.09 [5]. - Bank of America analyst Vivek Arya expressed skepticism about Intel's cost structure improvement for its foundry, citing slow adoption of the 18A node and competition [6]. - Arya also indicated that Intel's stock is overvalued, with a price target of $34 based on a low multiple of its enterprise value-to-sales ratio for 2027 [7]. Group 3: Nvidia's Position - Nvidia's decision not to use Intel's 18A node is influenced by the need for a reliable manufacturing process, as any defects would significantly delay production [9].

Core Viewpoint - The artificial intelligence (AI) sector continues to show potential for growth despite concerns about a bubble and funding challenges, with three leading companies expected to have significant upside in 2026 [1][2]. Group 1: Microsoft - Microsoft has seen a 15% increase year-to-date in 2025 but has faced recent pullbacks due to investor concerns over OpenAI's competitive position and funding capabilities [3][4]. - Microsoft holds a 27% stake in OpenAI and has committed $250 billion in cloud computing, which could be beneficial if OpenAI maintains its market position [3][4]. - Analyst Keith Weiss from Morgan Stanley upgraded Microsoft's stock with a price target of $650, indicating a potential 35% upside, citing stronger-than-expected demand for Azure AI [7]. - The introduction of Microsoft's next-generation AI chip, Braga, is anticipated in 2026, which could further enhance its competitive edge [8]. Group 2: Alphabet - Alphabet has experienced a 62% increase in 2025 and remains one of the cheaper stocks among its peers, suggesting room for further appreciation [9]. - Concerns about AI chatbots disrupting Alphabet's Search business have not materialized, with paid clicks showing growth of 2%, 4%, and 7% in the first three quarters of 2025 [10]. - The release of the Gemini 3 model has positioned Alphabet as a leader in AI, with significant interest in its Tensor Processing Units (TPUs) from other companies [12][13]. - Google Cloud has reached a $60 billion revenue run-rate with a nearly $5 billion operating profit run-rate, growing 34% in Q3, indicating its potential as a major profit center [14]. Group 3: Intel - Intel has seen an 83.6% increase in 2025, recovering from a distressed price point, but its market cap remains lower than other AI leaders [16]. - The new CEO, Lip-Bu Tan, is expected to make a significant impact as Intel begins high-volume manufacturing of its 18A node, which is crucial for regaining technology leadership [17]. - Success with the 18A node could lead to external customer wins, with major companies showing interest in Intel's upcoming 14A node technology [18][19]. - If Intel can demonstrate advancements in process technology and secure significant customer commitments, there remains considerable upside potential for its stock [20].

Core Insights - Nvidia's stock has increased by approximately 28% since December 6, 2024, while Intel's stock has surged by 95%, indicating a successful contrarian investment strategy [3] - The current market environment suggests that Nvidia, with a market cap of $4.4 trillion, is priced for perfection, while Intel, valued at $200 billion, is seen as undervalued [13][14] Nvidia's Performance - Nvidia remains a strong company, but it is now entering a "grind" phase after a period of rapid growth, with its market cap reflecting high expectations [5] - The transition from training AI models to inference workloads may lead to increased cost sensitivity, impacting Nvidia's pricing power [9] Intel's Positioning - Intel is positioned as a key player in the geopolitical landscape, capable of establishing a resilient supply chain outside of TSMC, which is critical as chip supply becomes intertwined with national security [12][17] - Intel's 18A node technology, while not expected to outperform TSMC's N2 immediately, could still provide value if it demonstrates stability and feasibility [11][17] Market Dynamics - The increasing use of Google's Tensor Processing Units (TPUs) poses a competitive threat to Nvidia, as these chips offer significant price-performance advantages for inference tasks [10] - Major tech firms like Amazon, Microsoft, and Meta are under pressure to optimize their AI hardware expenditures, which could lead to a shift away from Nvidia's high-cost GPUs [10] Strategic Considerations - Intel's investments in new manufacturing facilities and innovative technologies like Backside Power Delivery (PowerVia) could enhance its competitive position and appeal to high-performance applications [17] - The geopolitical context, including tariffs and U.S. government support for local manufacturing, may further benefit Intel's market position [17]

Core Insights - Intel's Q3 earnings report indicates a revenue of $13.7 billion, reflecting a 3% year-over-year increase, with a diluted EPS of $0.90 and a gross margin of 38.2% [6] - The company anticipates that yields for its 18A manufacturing process will improve to industry-acceptable levels by the end of next year, with better performance and yield expected from the next-generation 14A node [1][4] - Analysts have noted that demand for Intel's CPUs is exceeding supply, a trend that may persist into 2026, leading to a raised Q4 outlook by 3% [4] Financial Performance - Revenue for Q3 was $13.7 billion, up 3% YoY, with a net income of $4.1 billion compared to a net loss of $16.6 billion in Q3 2024 [6] - The guidance for Q4 revenue is projected between $12.8 billion and $13.8 billion, with a gross margin expected at 34.5% [6] - The company’s Q4 guidance includes a gross margin target of 36.5%, but analysts suggest that a full EPS recovery requires a gross margin above 45% [9] Analyst Insights - Bank of America has lowered its pro forma EPS estimates for 2026 by 4% to $0.51, citing slow internal adoption of the 18A node and competitive pressures in the foundry market [7] - The stock is considered overvalued, trading at a 50 multiple price-to-earnings estimate for 2027, with a reiterated underperform rating and a price target of $34 [8] - Key challenges identified include gross margin pressure, tough competition in both products and foundry, and a lack of large external customer wafer orders [9]