Shares of semiconductor giant Intel (INTC 1.79%) are trading 18% lower year to date and the stock is hovering just 14% above its mid-March market bottom. Meanwhile, the S&P 500 gained 4% in 2020, and Intel's archrival Advanced Micro Devices (AMD 5.25%) posted a 72% gain. Is Intel down for the count, or is the stock primed for a soaring return to full health? Let's have a look.

The bear case

Critics argue that Intel's recent manufacturing hiccup in its 7-nanometer chips is letting AMD steal market share in both the data center and home computing markets. That's particularly unfortunate at a time when work-from-home policies are driving strong demand for both of these product categories.

The production problems run so deep that Intel is actually using third-party manufacturing services such as Taiwan Semiconductor Manufacturing (TSM 4.07%) for the first time in many years. Chipzilla has lost a treasured competitive advantage here.

Even before the coronavirus crisis and the extended manufacturing delays, 2020 always looked like it would be a roller coaster. Hyperscale data center clients ordered a ton of processors in 2019 as they built out their cloud computing capabilities. That surge was expected to turn into a drop this year as the buildout projects ran their course.

Intel's new corporate logo.

Image source: Intel.

The bull case

This is a significant flashpoint in Intel's business history. As an Intel shareholder myself, I'm pleased to see that management is treating it as a serious crisis.

The decision to use third-party manufacturers did not come easy, and using the same production facilities as AMD and many other rivals gives up the in-house production trump card for a while. That said, it doesn't give Intel's rivals the higher ground, either. Doing battle on a level playing field isn't a familiar situation for Intel, but this, too, shall pass.

Intel revamped its corporate identity in early September, changing up the classic company logo and promising to "leap into the future" with a new lease on life.

"We are a different company than we were even five years ago. We are actively executing against a new growth strategy, creating a new revenue mix, and pursuing new market segments fueled by data and the rise of artificial intelligence, 5G network transformation, and the intelligent edge," Senior Vice President and Chief Marketing Officer Karen Walker said in a prepared statement. "We know a new brand won't come to life with new colors, sounds, and logo; it needs to be a unifying rally cry built on action and aligned with our company purpose."

The company is also boosting its investments in manufacturing facilities, preparing to regain its lost process technology advantage in the next few years.

Is Intel a buy, all things considered?

Intel is on fire sale for good reason. The bears and the critics have a strong argument today based on the shifting sands of the semiconductor sector and Intel's manufacturing issues. At the same time, I see Intel's shares as a fantastic value when they trade for just 9 times trailing earnings and 13 times free cash flows. The low stock prices also result in a generous dividend yield of 2.7%.

There is no such thing as a risk-free investment, but buying Intel at these rock-bottom prices is a low-risk idea. This stock is hanging out in Wall Street's bargain bin with lots of room for long-term gains if Intel can just get back to business as usual.

Consider the fact that Intel's market cap is only 130% larger than ADM's, even though there's a tenfold difference in annual revenues. The bottom-line profit margin trends look like this:

AMD Profit Margin Chart

AMD Profit Margin data by YCharts

Intel may be less exciting than AMD, but this stock will also let me sleep at night in a way that its smaller rival won't. If I didn't already own Intel, I would have been happy to start a position today.