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Intel Is Positioning Itself to Make the Comeback of the Century

By Neil Rozenbaum – Aug 25, 2021 at 10:00AM

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Despite recent struggles, Intel, with its new CEO and roadmap, might surprise a lot of investors in the coming years.

In this video I will be talking about why I believe Intel (INTC -2.10%) is making its way back to the top of the semiconductor world. Despite its recent struggles and market share loss to AMD and Nvidia, Intel remains the world's number one semiconductor company in terms of revenue. As I mentioned two months ago, I believe Intel is cheap compared to its peers. You can find the video below.

Valuation matters

Intel's current P/E stands at 11.5, which means it currently trades at a discount compared to the industry's average of 20 and to closest competitor AMD, which has a multiple of 37. Now, it makes sense for AMD to trade at a premium because it is going through a growth cycle while Intel has been stagnant for years.

But more recently, Intel has announced it will be investing $20 billion in its Arizona facility and $3.5 billion in its New Mexico one. This will allow Intel to build chips for other customers, just like TSMC. As of today, Intel has announced that it has recruited Amazon's AWS and Qualcomm to its "Intel Foundry Services." It might only be a matter of time before many other large corporations start using Intel's U.S.- and Europe-based fabs to build their products outside of Asia. 

Intel also announced new GPUs that should compete with AMD's and Nvidia's, but they won't be available until early 2022. 

Now what

According to Chinese media company UDN, Intel has purchased TSMC's remaining 3-nanometer-chip manufacturing capacity. Intel, being a much bigger player than AMD, might get earlier access to TSMC's latest manufacturing innovations.

Intel also recently announced that it has come to an agreement with the U.S. Department of Defense to establish a domestic commercial foundry infrastructure. With more than 80% of the leading manufacturing capacity being concentrated in Asia, it makes sense for the U.S. government to back a company like Intel to bring the supply chain back to the United States.

For full insights, do watch the video below.

*Stock prices used were the closing prices of August 23, 2021. The video was published on August 24, 2021.

Neil Rozenbaum owns shares of Intel. The Motley Fool owns shares of and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policyNeil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

Intel Stock Quote
$28.73 (-2.10%) $0.61
Taiwan Semiconductor Manufacturing Stock Quote
Taiwan Semiconductor Manufacturing
$79.22 (-2.68%) $-2.18
Nvidia Stock Quote
$158.27 (-2.72%) $-4.43
Advanced Micro Devices Stock Quote
Advanced Micro Devices
$73.19 (-2.60%) $-1.95

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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