"Moment of truth" for Intel: its stock at its highest in a year after landmark presentation

Shares of chipmaker Intel ended trading on Wednesday, January 7, up 6.5% to $42.6. This is the maximum price of the securities for the year, it is 141% higher than the April peak.

At the CES electronics show in Las Vegas, the company took an important step toward its reestablishment as the market leader in PC processors by unveiling its new Core Ultra Series 3 chips, Yahoo Finance explains the dynamics. Codenamed Panther Lake, these chips are the first to be released using Intel's latest 18A process technology. According to Intel, they are already in production and orders for them will start being taken this week. According to the company, the first Core Ultra Series 3 processors will be used in more than 200 PC models.

The release of Intel 18A process technology has become the largest technological update of the company for a decade, notes Yahoo Finance. The presentation of Panther Lake chips demonstrated that Intel was finally able to put a product made with this technology on the market: the manufacturer had been working towards this for several years.

"It's really important for Intel," Corey Johnson, chief market strategist at Epistrophy Capital Research, told Yahoo Finance. - Confidence in Intel has been eroded. There were reasonable doubts in the market about whether it could realize its stated plans."

Although the company has yet to attract a key contract customer to produce chips using the 18A process, Panther Lake's success may convince chipmakers to use Intel's future 18A-P and 14A process technologies, according to Moor Insights & Strategy analyst Anshel Sag. "This has been a moment of truth for Intel from the beginning," he told Yahoo Finance. - "Now they're back to being a company that knows how to execute [complex contracts].

In August, Reuters wrote that the 18A process, on which the company had high hopes, faced a serious obstacle - a high rejection rate. If the company is unable to bring production of good processors up to the required level, it is likely that Panther Lake production will not become high-margin, the agency warned.

Intel is actively trying to revitalize its weakened semiconductor business. The company has lost market share to AMD and Arm, Yahoo Finance recalls. It was caught in a vicious circle: mistakes in process design made chips less competitive, and falling sales led to underutilization of production capacity - this further hindered the recovery of plant efficiency. Former CEO Pat Gelsinger tried to solve the underutilization problem by opening fabs to contract manufacturing and accelerating the introduction of new process technologies. However, no major customers like Broadcom or Nvidia ever became Intel customers. At the end of 2024, the company's stock was excluded from the Dow Jones blue-chip index for the first time in more than 20 years.

The chipmaker is now continuing to restructure its loss-making manufacturing segment under the leadership of new CEO Lip-Bu Tan. Over the past six months, Intel has received investments and public support from the White House, Nvidia and SoftBank. The company is in talks with Apple and late last year offered contract manufacturing at its plants to rival AMD.

According to MarketWatch, Wall Street is still wary of the company's success: 33 analysts out of 46 take a neutral position with a Hold rating. Six of them advise to buy Intel securities (ratings Buy and Overweight). Nevertheless, a month ago the company had only five recommendations to buy, and three months ago - four. Seven analysts now advise to sell the chipmaker's shares (Underweight and Sell). The Wall Street consensus price target is nearly 10% below the current price target.

One of those taking a more optimistic view of Intel is Melius Research analyst Ben Reitzes. This week, he upgraded the stock from Neutral to Buy and raised his target price from $33 to $50. "We really like Lip-Bu Tan, but more importantly, we like it even more for those with power - President Trump, [U.S. Commerce] Secretary [U.S. Commerce] Latnick, [Nvidia CEO] Jensen Huang, and even [AMD CEO] Lisa Su," Reitzes wrote in a note cited by Seeking Alpha.

This article was AI-translated and verified by a human editor