Last Friday, Intel (NASDAQ:INTC) fell by 6.3%, breaking down below its 50-day moving average and backing down from the $50 – $51 trading range in the month. What happened this time to INTC stock?
Bloomberg reported a rumor that Microsoft (NASDAQ:MSFT) would build its chips in-house. If its Surface PCs and cloud servers get MS-made chips, Intel will continue losing market share from the all-important server space. Intel is already battling AMD (NASDAQ:AMD) in the server market. Its Xeon is no match for EPYC. Adding Microsoft as a competitor only worsens its positioning.
Investors get a modest ~3% dividend yield holding Intel stock. But buying Nvidia (NASDAQ:NVDA) and the GPU computing solution or AMD, as it grows market share, may prove a better trade. Value investors should not give up on Intel. Mobileye posted revenue of under $1 billion last year. Increasing demand or advanced driver assistance solutions will drive its revenue higher.
Intel is an inexpensive investment in ADAS. The risk, however, of the CPU market share deterioration will weigh on the stock. Still, Intel has billions in funds to market its CPUs for PC and servers. As it overcomes delays in next-generation chip development, sales will rebound. Intel is a compelling growth and value at a time when semiconductor stocks are expensive.