Stock Market

Intel (NASDAQ:INTC) is well-known for introducing new, vastly improved, high-end desktop chips. Accordingly, as hardware and data center trends improve, many analysts are expecting INTC stock to rise. My own personal INTC stock price prediction stands at a whopping $85 per share.

There are many reasons for this, over and above the aforementioned thesis. Intel could see impressive growth from the surge in interest around artificial intelligence. Additionally, as technological innovation picks up, Intel’s hardware could run into incredible demand.

Considering these factors, I remain very bullish on INTC stock. Let’s dive into why this company could have more upside from here.

Intel Is Going to Become a Big AI Player

In line with my previous predictions, Habana Labs, an Israeli company that Intel acquired in 2019, appears likely to help Intel become a significant player in AI. (The process just took much longer than I expected).

At a recent event, Intel reported that its new Xeon chip, working with its “new AMX (Advanced Matrix Extensions) AI accelerator engine,”  was four times more efficient than a competing product from AMD in facilitating the development of some AI capabilities.  Moreover, according to a Seeking Alpha columnist, Habana’s Gaudi chips “has put the company in a good position now to compete in the AI inference market.”

Undoubtedly, there’s tremendous upside for AI, given its prospective capabilities and usefulness. Thus, it’s evident that the demand for the technology will be huge. Statista estimates that the value of the global AI market will more than double between this year and 2025. The market should reach $420.5 billion in the latter half of the year.

As the demand for Intel’s chips jumps amid the AI explosion, Intel’s revenue, profit, and stock multiples should all surge as well.

Intel Has Launched New, Upgraded, High-End Chips

In February, Intel unveiled “new Intel Xeon W-3400 and Intel Xeon W-2400 desktop workstation processors,” HPC Wire reported. According to the website, these chips are “Intel’s most powerful desktop workstation processor ever designed.” These chips also “provide  massive performance for media and entertainment, engineering, and data science professionals.” Featuring “breakthrough new compute architecture,” these could be the future of high-end chips.

Meanwhile, investment bank Susquehanna is also upbeat on the company’s new computer chips. Analysts called the company’s recent chip launches “a huge positive” last week. Thus, it’s no surprise that Intel believes that it will regain leadership of the chip sector in 2025.

Improving Hardware, Data Center Trends, and Aid From DC

While data center spending, PC, and smartphone sales slowed last year as consumers turned to “experiences” over the internet, the latter trend should ease soon as consumers’ need for experiences is partially satiated by the end of 2023.

Additionally, a number of bullish secular trends, including the Internet of Things, the migration to the cloud, and the proliferation of Big Data, remain intact. These should push data center spending higher over the longer term.

As worries about a recession fade, companies will probably be more willing to spend more money migrating their data to the cloud, and launching initiatives related to Big Data and the Internet of Things. Those initiatives, in turn, will increase data centers’ workload. This should lift demand for server chips made by Intel and its peers.

As far as aid from Washington D.C., Intel, which plans to build two concrete chip factories in Arizona, is well-positioned to receive subsidies for the project. The company is also expected to receive tax breaks for its endeavor. These funds should enable Intel to build its chip factory in a cost-effective manner, while allowing the company to benefit from a new, ample supply of chips just as the demand for chips ramps up.

The Bottom Line on INTC Stock

Intel is well-positioned to benefit from multiple, strong trends in the coming years. This is a company that’s still trading at a very low trailing price-earnings ratio of 15-times. Thus, considering these points, my INTC stock price prediction for the end of 2025 is $85.

As of the date of publication, Larry Ramer owned shares of INTC.  The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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