The past two years have been great for semiconductor stocks. Well, most semiconductor stocks, they are. Since OpenAI introduced ChatGPT to the world on November 30, 2022, shares have soared Nvidia and Advanced micro devices They increased by 721% and 83%, respectively. By contrast, peer-chip stocks Intel (Nasdaq: INTC) It decreased by 25% during this period.
There’s no doubt that Intel has faced a number of challenges over the past couple of years as its groups have quickly overtaken it in the AI revolution. However, after taking a closer look at Intel’s price action, there may be some reasons to believe that the stock is positioned for a rebound.
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Below, I’ll explore something Intel stock hasn’t done since 2022 and explain why I’m cautiously optimistic that better days may lie ahead for the chipmaker.
The chart below shows Intel Price to sales (P/S) ratio during the past three years. The first thing I noticed was that it bottomed at around the 1.5 level sometime between August and September. The last time Intel’s P/E ratio reached this level was in 2022 – and coincidentally, in around the same months of 2022 as well.
What I also noticed is that Intel stock started to rise after the ratio bottomed at 1.5 in late 2022. Furthermore, Intel stock continued to rise throughout 2023 – only to return to its lows through most of this year.
on the surface, Investors may think Intel stock has hit bottom And stocks are destined to repeat the upward movements we saw in 2023. However, smart investors realize that history is no indication of future performance. One has to look for actual catalysts – and I see several potential catalysts right now that could help the stock rebound.
As I noted above, Intel’s P/E ratio bottomed out somewhere in August and September 2022 and then continued to rise for ages. Do you know what else happened during this time period? President Biden signed the CHIPS and Science Act into law on August 9, 2022. And do you know what company was the main beneficiary of the CHIPS Act? It’s Intel.
Over the past two years, Intel has received tens of billions of dollars in grants and loans as part of CHIPS Act funding. While this sounds great on the surface, there are some caveats. That is, companies rarely receive federal funding the moment the award or grant is announced. In other words, it may take a long time to actually receive this funding. Furthermore, sometimes the original dollar amount awarded can change.
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