We recently published a list of 10 Most Buzzing Stocks To Buy Now. In this article, we are going to take a look at where Intel Corp. (NASDAQ:INTC) stands against the other buzzing stocks.
Stock Market Volatility
September and October tend to be the most volatile months for the stock market, particularly during election years. This was recently discussed by Sam Stovall, the chief investment strategist at CFRA Research, who expects the volatility to stay until the end of October.
Stovall says that while the S&P 500 recovered all its 2022 bear market losses by January this year, and reached 22 new all-time highs by March, equities have digested some of these gains and experienced sector rotation away from 2023 high flyers into more defensive areas of the market. Hence, the year started great, but the markets are declining once again. The S&P 500’s average volatility in October 2023 was 35% higher than the average for the remaining 11 months of the year.
Investors are concerned that the Fed will be slower to lower interest rates while inflation remains sticky and GDP growth begins to cool. Stovall expects three 25-basis point cuts this year, followed by another four in 2025. He thinks that while a 50 basis point cut is rare since it only ever happened twice, in 2001 and then 2007, it is still not unlikely given that the economy is worse than expected.
According to Stovall, investors need to be prepared for this increased volatility as the market digests the Fed’s actions and the potential impact on the economy. The market will likely remain uncertain until the Fed can find the right balance between slowing down the economy and stopping inflation, without causing a recession.
Tom Lee, Fundstrat Global Advisors managing partner and head of research, is of a similar idea, suggesting that investors should remain cautious over the next 8 weeks, due to both uncertainty surrounding elections and the September cuts. He says that the stock market may experience a 7-10% pullback, considering there have already been two 7% corrections this year.
Lee thinks at least a 5% pullback can be anticipated, but if it’s only 1-2%, then that’s negligible. But despite the recommended caution for the 8 weeks starting September, he thinks the volatility does not translate into a tough full-year. He views this pullback as a buying opportunity, believing that the market has not yet reached its peak for 2024.
As Lee encourages investors to be ready to buy the dip, we are here with a list of the most buzzing stocks to buy now.
Note: All price/volume data is as of September 6.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician soldering components for a semiconductor board.gggggggggg
Intel Corp. (NASDAQ:INTC)
Volume: 85.307 million
Average Volume (3-Month): 64.564 million
Number of Hedge Fund Holders: 75
Intel Corp. (NASDAQ:INTC) is one of the world’s leading semiconductor chip manufacturers by revenue, playing a significant role in advancing the x86 series of instruction sets, widely utilized in personal computers. The company’s foray into augmented reality focuses on using its chips to power AR devices.
Earlier this year, the Japanese division partnered with 14 domestic firms to establish a research body focused on automating “back-end chipmaking processes,” such as packaging, as Japan and the US work to strengthen their chip supply chains amidst geopolitical tensions.
In Q2, it introduced its new Xeon 6 artificial intelligence chips designed to compete with industry competitors NVIDIA and AMD. Despite that, the company recorded a 0.9% year-over-year revenue decline in this quarter, with the total revenue amounting to $12.83 billion.
In August, the company announced it was cutting 15% of the 125,000-strong workforce and suspended dividends to cut spending and streamline the company.
Even with these massive layoffs, the inventory problem won’t be resolved anytime soon because the company has 137 days of inventory, worth over $11.2 billion. This is much higher than the industry average of 90 days.
CTO Greg Lavender stated that the company’s cumulative software revenue could reach $1 billion by the end of 2027. Such an outlook brings investor trust to Intel Corp. (NASDAQ:INTC). 75 hedge funds hold it as of June 30, with the largest stake at $742,084,558 by Citadel Investment Group.
Ariel Global Fund stated the following regarding Intel Corporation (NASDAQ:INTC) in its Q2 2024 investor letter:
“Alternatively, several positions weighed on performance. One of the world’s largest semiconductor chip manufacturers by revenue, Intel Corporation (NASDAQ:INTC), underperformed in the period on news of a longer than expected turnaround in profitability within the Foundry business. This was exacerbated by disappointing near-term guidance due to a weakening demand environment signaling an extended replacement cycle. We view the quarter as a temporary trough that should dissipate as we see signs of a cyclical recovery for personal computers (PCs) and central processing units (CPUs), driven by the Windows 11 upgrade. In our view, the market is overlooking the progress Intel is making to advance its manufacturing process. Not to mention, the company’s efforts to serve as a viable second source foundry partner of leading-edge silicon. We believe the separation of the design and manufacturing businesses will be a key catalyst in unlocking improved financial performance while also enhancing the competitiveness of the foundry business.”
Overall INTC ranks 8th on our list the most buzzing stocks to buy. While we acknowledge the growth potential of INTC as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than INTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.