Intel stock has gained close to 14% over the last week, as it became clear that Donald Trump would be elected to the U.S. presidency. Although Intel has been plagued by multiple issues, including market share losses, significant manufacturing missteps, and the tech industry’s broader transition from CPUs to GPUs, investors seem to think a second Trump term will be a good thing for Intel. So what will a second Trump term mean for Intel stock?
The decrease in INTC stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 6% in 2021, -47% in 2022, and 95% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could INTC face a similar situation as it did in 2021 and 2022 and underperform the S&P over the next 12 months – or will it see a recovery? See our Intel upside analysis on How Intel Stock Can Surge 3x To $60 On the other hand, see our counter scenario which explores how Intel Stock Could Dive To $10
Donald Trump has been a major advocate of boosting U.S. manufacturing. This could play in Intel’s favor, considering its sizable fabrication footprint in the United States. In contrast, rivals such as AMD and Nvidia are fabless and largely rely on foundries such as Taiwan’s TSMC for their production. There’s a possibility that Intel could see considerable regulatory support aimed at boosting domestic chip production. For example, the government could look at imposing tariffs that make it more expensive for foreign fabrication companies to produce and export chips to the U.S. A stronger emphasis on domestic production, either through tariffs or via other policies, could drive more business to Intel.
Intel’s foundry division – which produces chips for third-party customers – could also see stronger demand, particularly as companies look to rely on U.S. suppliers to avoid potential duties. Semiconductors are critical for national security – an area that Trump has consistently emphasized – and Intel’s domestic manufacturing might be viewed as contributing to protecting U.S. technological independence. Intel could also see a higher number of contracts awarded to it from the government, being the only American semiconductor player that designs and fabricates leading-edge logic chips in the U.S. This means that the company’s domestic chip supply chain could help it win more contracts under Trump, who boosted military spending over his last term. While other companies including TSMC have been looking to boost manufacturing operations in the U.S., it could take time, giving Intel an edge in the near-to-medium term.
While Trump’s pro-manufacturing stance might align with Intel’s long-term goals, there are still uncertainties surrounding the CHIPs Act, a 2022 initiative designed to revitalize U.S. semiconductor production. The CHIPs Act includes around $39 billion in grants, loans, and tax credits to encourage domestic chip manufacturing and ensure supply chain security. Trump and some of his allies have criticized the law, arguing that tariffs might be the better solution, and this could bring about some uncertainty for companies like Intel, a major beneficiary of these policies, given its large U.S.-based manufacturing operations. Intel was poised to receive up to $8.5 billion in direct funding via the act with the option to draw on as much as $11 billion of loans. That said, the act was passed with bipartisan support, potentially meaning it’s likely to remain intact in some form, even with a new administration in place.
While the changing regulatory environment could give Intel a boost, we believe much of Intel’s future success hinges on its new manufacturing processes, specifically the new 18A process – which is its most advanced manufacturing technology to date. This process, set to begin production in 2025, will not only make Intel’s CPUs and AI chips more competitive but also support Intel’s strategy to grow its foundry business. Intel expects high-volume production of the process to start during the second half of 2025, mostly for Intel’s own chips. Intel announced in August that it had reached critical milestones, noting that the chips made with this process had powered on, booted Windows, and were operational within Intel.
Once Intel transitions its latest server and PC chips to this process node, ending its outsourcing of some of its chips to TSMC, we could see higher utilization rates, which would help reduce costs. Additionally, Intel indicated that the first external foundry customer was expected to tape out (move from design to foundry for manufacturing) on the 18A node in 2025. This could also boost Intel revenues to a certain extent. While the key challenge for Intel will lie in meeting production yield expectations at a large scale, the company has shown progress on this front as well.
Intel has lost considerable ground to AMD in recent years. AMD now holds nearly a quarter of the x86 CPU market in the PC and server space, per a recent report from Mercury Research. However, the company’s pipeline of new products shows promise. Intel’s upcoming chips, such as the Lunar Lake for laptops and ultra-compact devices, and the Arrow Lake for desktops, will be built using TSMC’s advanced 3nm process. These chips could put Intel ahead of AMD’s competing offerings, which are manufactured using TSMC’s older 4nm process. In the server market, Intel’s new Sierra Forest and Granite Rapids chips, built on its “Intel 3” process node, are designed to compete more effectively with AMD’s offerings.
With the PC market showing signs of recovery and these new chips hitting the market, Intel could see a boost in revenue. Intel is also betting big on AI. With its Gaudi 2 and upcoming Gaudi 3 AI accelerators, Intel is hoping to challenge Nvidia’s dominance in the AI space. Priced at about $65,000 – roughly a third of Nvidia’s comparable products – Intel’s AI chips could appeal to cost-conscious customers. The company projects $4 billion in AI chip sales for 2024, with Gaudi 3 expected to contribute $500 million. If these products gain traction, they could be a significant driver of revenue growth for Intel in the years ahead. We value Intel stock at about $27 per share, slightly ahead of the current market price. See our analysis of Intel valuation expensive or cheap.
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