Shares of Intel (INTC -9.20%) were moving higher in December as the chipmaker best known for supplying PCs announced a new line of artificial intelligence (AI) chips at its AI Everywhere event. The company also received a multibillion-dollar grant from Israel to open a new plant and benefited from other tailwinds, including U.S. policy supporting chip manufacturing at home.
As a result, the stock finished the month up 12%, according to data from S&P Global Market Intelligence. As you can see from the chart, the stock recovered from an initial slide to start the month, making most of its gains in the second half of December.
Intel continues to evolve
With the PC market still struggling, Intel stock rebounded in 2023 on hopes that it can capitalize on the AI opportunity and expand its manufacturing capabilities with support from the U.S. government.
The biggest moment for the company last month seemed to be its AI Everywhere event on Dec. 14, where the company unveiled a new Core Ultra mobile processor family. Intel said this was its largest architectural shift in 40 years and represents its bid to lead the AI PC transition, as forecasts indicate that AI PCs will comprise 80% of the PC market by 2028.
The stock rose 1.4% on the day of the event and climbed another 2.2% the following day on high volume. Intel stock also got an upgrade from Bank of America the day after the event, which raised its rating from underperform to neutral and lifted its price target from $32 to $50.
Later in the month, the Department of Commerce called the U.S. legacy chip supply chain a "matter of national security," indicating its intention to support the semiconductor industry, which should benefit Intel.
Finally, Intel also won a $3.2 billion grant from the Israeli government to build a new $25 billion plant in Southern Israel. Both of those news items seemed to help the stock finish the month on an upswing.
What's next for Intel?
Intel stock has pulled back in January along with the broader tech sector, in a sign that investors think the stocks may have become overheated after the rally over the last two months of 2023.
Investors seemed to shrug off the company's presentation at the CES trade show, including its acquisition of Silicon Mobility, a fabless chip company that specializes in system-on-chips (SoCs) that Intel hopes will boost the company's offerings in the automotive market.
With the PC market still struggling, the bar has been raised for Intel stock to keep moving higher this year. The key question for the company is if it can establish itself as a significant player in AI chips. Keep your eye out for updates on the chips it launched last month.
