Should You Stay Away from Intel?

PHOTO CREDIT: Intel

OVERVIEW

Intel Corporation is a company based in the United States. The company designs, manufactures, and sells semiconductor products around the world. The company makes products like CPUs and GPUs, chips that are found in cars and many other mobile devices. They also make these products for powerful data centers around the world. The company was founded in 1968.

Why You Should?

  1. Intel is a decent reopening play in an investor’s portfolio. The pandemic has hurt the company as it has caused many supply chain issues. This caused the company to see higher than expected costs and other issues with the supply chain. However, once the pandemic is over, the company plans to return to a more favorable environment.
  2. The COVID-19 pandemic has also benefited Intel as they saw a rise in demand for some semiconductor products. This is because as people stayed at home and shifted to remote environments, the demand for devices rose. This benefited the company and its investors.
  3. The semiconductor industry operates at extremely high margins. Intel currently has very healthy margins for future growth opportunities and for investor returns. If the company is able to maintain these high margins, it will benefit investors in the company.
  4. Biden is looking in order to expand the infrastructure for the semiconductor industry in the United States. We can see this through the administrations infrastructure plan as they have set aside billions of dollars for the semiconductor industry to use to grow operations. This will benefit the company and its investors.
  5. The company has seen rising revenues and profits over the past couple of years due to the reasons mentioned above. This has helped the company further develop its operations and product offerings. This has also benefited investors in the company. In the financial year of 2020, the company reported revenues of around 77.87 billion and profits of around 20.9 billion. In the financial year of 2019, the company reported lower revenues of around 71.97 billion but higher profits of around 21.05 billion.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. The company faces tough competition in the semiconductor industry. Some of these competitors include Nvidia, AMD, Taiwan Semiconductor Manufacturing, and many others. This competition has hurt the company in the past and might continue to hurt both the company and its investors in the future.
  2. Intel is starting to fall behind its competition. Recently, Nvidia and AMD both announced new chipsets for data centers and mobile devices. These products outperform the current product offerings of Intel. This has happened in the past and has hurt the company. This is why I think that investors should invest in companies like Nvidia and AMD instead of Intel.

MY OPINION

I think that there are better semiconductor stocks to invest in (like AMD and Nvidia). This is because Intel faces tough competition and is starting to fall behind other companies. However, Intel remains a decent long-term investment due to its position as a reopening play, healthy margins, rising revenues and profits, and positive impacts from a Biden administration and the pandemic.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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