Intel Stock Surges Amid Trump’s Presidential Win: What’s Next?

Intel stock has gained close to 14% over the last week after Donald Trump secured the U.S. presidency. Despite facing market share losses and manufacturing challenges, many investors believe a second Trump term could positively impact Intel. So, what consequences might this presidency have for Intel stock?

Volatile Returns: A Look at Intel’s Recent Performance

Intel’s stock performance over the past four years has been quite unpredictable compared to the S&P 500. The returns were 6% in 2021, -47% in 2022, and an impressive 95% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, which includes 30 stocks, has experienced far less volatility and has outperformed the S&P 500 every year during this period. Could Intel follow a similar pattern to 2021 and 2022 in the upcoming year, or might it bounce back? For insights, review our analysis on how Intel stock could skyrocket to $60 or potentially plummet to $10.

Trump’s Manufacturing Focus: A Potential Advantage for Intel

Donald Trump has consistently prioritized boosting U.S. manufacturing, which could benefit Intel significantly due to its large fabrication presence in the U.S. In contrast, competitors like AMD and Nvidia do not manufacture their own chips and depend on foundries such as TSMC in Taiwan. Regulatory support for domestic chip production could be on the horizon, possibly involving tariffs that would make imported chips costlier. Such measures could funnel more business toward Intel.

Increasing Demand for Intel’s Foundry Services

Intel’s foundry division, which manufactures chips for external clients, may witness stronger demand as companies seek U.S. suppliers to avoid potential tariffs. Given that semiconductors play a crucial role in national security—a topic Trump has emphasized—Intel’s domestic manufacturing might protect its market position and enhance its chances of securing government contracts. Being the only American semiconductor company that fabricates leading-edge logic chips domestically could give Intel an advantage, especially in military contracts.

The CHIPs Act: Support and Uncertainty

While the current political climate may favor Intel, uncertainties remain regarding the CHIPs Act, which was designed to facilitate U.S. semiconductor production through $39 billion in grants and loans. Some policymakers, including Trump, have raised concerns about the effectiveness of the CHIPs Act, suggesting that tariffs may serve as a better approach. Despite that, the act enjoys bipartisan support, indicating it may continue under a new administration. Intel stands to benefit substantially, with potential access to up to $8.5 billion in funding.

Looking Ahead: Key Manufacturing Innovations

Intel’s success will largely depend on its advancements in manufacturing technology, particularly the new 18A process expected to begin production in 2025. This cutting-edge technology not only enhances Intel’s CPUs and AI chips but also bolsters its foundry business. The company reports that the first external foundry customer is anticipated to start using this process in 2025, which could lead to increased revenues.

Competing Against AMD and Nvidia

In recent years, Intel has lost market share to AMD, which now holds nearly 25% of the x86 CPU market for PCs and servers. Nonetheless, Intel has a promising lineup of future products. Upcoming chips like the Lunar Lake for laptops and the Arrow Lake for desktops will utilize TSMC’s advanced 3nm technology. These innovations could allow Intel to outpace AMD, whose products are built on an older 4nm process.

AI Opportunities and Revenue Growth

As the PC market shows signs of recovery, Intel aims to capitalize on the artificial intelligence sector with its Gaudi 2 and forthcoming Gaudi 3 AI accelerators. Priced around $65,000—one third of Nvidia’s comparable offerings—Intel’s AI products may attract more budget-conscious clients. The company forecasts $4 billion in AI chip sales for 2024, with Gaudi 3 contributing roughly $500 million. If successful, these products could significantly drive revenue growth.

[1] Returns as of 11/11/2024
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.