Intel (INTC:NSD) experienced an upswing of 2% in its price during extended trading. The public disclosure of its turnaround strategy sparked this reaction. INTC intends to carve out the Programmable Solutions Group (PSG) unit into a standalone business entity by January 1, 2024. Furthermore, the company aims to maintain a majority ownership stake in this business, with plans for an eventual IPO within the next two to three years to fully spin off the PSG unit. This article will highlight the impact of these objectives on the Intel stock forecast.
Significance of the PSG Unit:
The PSG unit produces re-programmable chips for sectors like automotive, aerospace, industrial, and defense. INTC acquired PSG via a $16.7 billion Altera deal in 2015.
Leadership Transition:
Sandra Rivera, Intel’s current head of data centers and AI chips, becomes CEO, while Shannon Poulin, currently the PSG unit’s corporate vice president and GM, assumes the COO role in the newly formed entity.
A Strategic Move to Drive Growth:
This strategic maneuver forms a crucial part of CEO Patrick Gelsinger’s overarching strategy to refocus Intel on its core operations. INTC is diligently working towards closing the gap with its rival, Taiwan Semiconductor (TSM), in terms of manufacturing capabilities by the year 2026. Simultaneously, the company aims to empower the programmable chip unit to bolster its presence in the burgeoning field-programmable gate array (FPGA) industry.
FPGA Market Growth Projections:
According to insights from third-party sources, the FPGA market is projected to achieve a compound annual growth rate exceeding 9%, expanding from $8 billion in revenue in 2023 to an estimated $11.5 billion by 2027. As a result, numerous companies are vying for a slice of the FPGA market, recognizing its promising growth potential. A significant competitor to INTC, Advanced Micro Devices (AMD:NSD), made headlines with its $35 billion acquisition of FPGA manufacturer Xilinx last year.
Intel’s Investment Prospects
INTC’s proactive steps to revitalize its business by shedding non-core segments and divesting shares of its promising automotive division, Mobileye, have garnered praise. Additionally, the company’s robust market share in the PC and server processor sectors affords INTC a competitive edge. Nonetheless, fierce competition in the data center and AI segments remains a challenge.
Intel Stock Forecast:
Based on an Intel stock forecast from 25 analysts, the average analyst target price is USD 34.13 for October 2024. The consensus rating is “hold,” and Stock Target Advisor’s analysts are “slightly bullish.” This assessment is based on five positive and four negative signals.
Intel’s Market Performance:
The last closing stock price was USD 35.69. This price has changed by +4.29% over the past week, -8.56% over the past month, and +51.38% over the last year.
Conclusion:
Intel’s unveiling of its turnaround strategy has generated renewed optimism among investors. The company’s strategic moves, coupled with its competitive advantages, make it a notable contender in the dynamic semiconductor industry. However, ongoing challenges in certain market segments warrant close monitoring as Intel navigates its path to future growth and profitability.
