TD Cowen has maintained a Hold rating on Intel Corporation (NASDAQ: NASDAQ:INTC) with a steady price target of $25.00.
The firm acknowledged Intel's recent multi-year, multi-billion dollar agreement with Amazon (NASDAQ:AMZN) Web Services (AWS), which includes a custom "AI fabric chip" based on Intel's 18A technology.
The deal is seen as a significant endorsement of Intel's 18A technology and secures a major customer for Intel's Foundry services.
The announcement came just as TD Cowen began its coverage of the semiconductor giant, marking an auspicious start. Intel's CEO Pat Gelsinger shared a letter outlining the future direction of the company following a board meeting, detailing the next phases of its turnaround strategy. This strategic move by Intel is aimed at reinforcing its position in the semiconductor industry.
Intel's collaboration with AWS represents a pivotal step in the company's efforts to expand its footprint in the foundry and artificial intelligence sectors.
The custom AI chip is part of a broader initiative by Intel to innovate and provide tailored solutions to significant cloud service providers.
The agreement with AWS is a milestone for Intel as it seeks to demonstrate the capabilities of its 18A technology. This technology is expected to play a crucial role in Intel's product offerings and competitive strategy moving forward.
In other recent news, Intel Corporation has been the recipient of substantial government support. The company has secured eligibility for up to $3.5 billion in federal grants for producing semiconductors for the U.S. Department of Defense.
This development is in line with the U.S. government's strategy to bolster domestic chip manufacturing for critical sectors, including national defense. Additionally, Intel has been awarded up to $3 billion for its Secure Enclave program, aimed at expanding trusted semiconductor manufacturing for national defense purposes.
Intel's subsidiary, Mobileye, announced a strategic shift in its operations, ceasing internal development of next-generation frequency modulated continuous wave lidars. On the financial front, the company recently announced a new $60 billion share buyback program and a 10% increase in its quarterly dividend.
Northland maintains a positive outlook on Intel, reiterating an Outperform rating, highlighting Intel's strategic ties with the U.S. Department of Defense and potential for a company split.
On the other hand, Citi has retained its Neutral rating on Intel's shares, expressing caution about the profitability of customizing Xeon chips.
InvestingPro Insights
In light of TD Cowen maintaining a Hold rating on Intel Corporation (NASDAQ:INTC), recent real-time data from InvestingPro offers additional context for investors. Intel's market capitalization stands at $89.41 billion, reflecting its significant presence in the semiconductor industry. Despite a challenging market environment, Intel's price-to-earnings (P/E) ratio is currently 91.17, which is expected to adjust to 46.43 in the last twelve months as of Q2 2024. This suggests that while the stock may seem expensive based on current earnings, there is anticipated earnings growth that could make the valuation more attractive in the near term.
Moreover, Intel's revenue has seen a modest growth of 1.99% in the last twelve months as of Q2 2024. While this growth rate is relatively low, it demonstrates stability in Intel's revenue streams. Additionally, the company's gross profit margin stands at 41.42%, indicating a strong ability to control costs and maintain profitability.
InvestingPro Tips highlight that Intel is trading at a low P/E ratio relative to near-term earnings growth, which may interest value investors looking for potential upside. Furthermore, as a prominent player in the Semiconductors & Semiconductor Equipment industry, Intel's longstanding dividend payments, which have been maintained for 33 consecutive years, could be appealing for income-focused investors. For those interested in exploring more about Intel's investment potential, there are over 10 additional InvestingPro Tips available at https://www.investing.com/pro/INTC, providing deeper insights into Intel's financial health and market position.
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