Motley Fool Hidden Gems Investing - Intel Hits a 52-Week High: Time to Buy?

Starting point is 00:00:00 Intel sets new highs. Is the climb just beginning? You're listening to Motley Fool Money. Welcome, Fools. I'm your host, Tim Byers, and with me are two old friends, Rick Minares and Asit Sharma. I hope you're both fully caffeinated because we've got a pretty caffeinated stock to talk about today, and that is Intel, ticker INTC. As of the time I wrote these notes on Friday, the stock had hit a fresh 52-week high of $45.67 a share. Is this the beginning of an extended rally that will last years, or is this time to cash in on a burst of enthusiasm and move capital into more proven chip stocks? I think these are really interesting questions, and we're going to tackle both of them. And then we are then going to get a bit philosophical

Starting point is 00:01:00 because we're going to have another episode of Mindset Monday, which is perfect for Asit and Rick. But first, we have to talk about Intel. So, Rick, I'm going to start with you here. Donald Trump, the President of the United States, had a meeting with Intel CEO, Lee Bhutan, and he was very excited about this meeting. He said, I just had a great meeting. He put this out on his social media platform, saying, I just had a meeting with the very successful Intel CEO, Lee Bhutan. Intel just launched its first sub-2 nanometer CPU processor design built and packaged right here in the USA. So I think we can say with some confidence here, Rick, that the president isn't making any serious technical statements. But what we do know is that

Starting point is 00:01:50 he does seem to be excited about putting federal funds and federal backing behind Intel. And in particular, there is one Defense Department initiative underway that will allow Intel to get a serious amount of money, billions of dollars, for manufacturing for the federal government. So, do you think this enthusiasm for Intel is warranted? How are you feeling about Intel knowing that it's hit a 52-week high. Sometimes you see a stock start to move up before the fundamentals get there. With Intel, you see that. 2025 will be the fourth consecutive year of declining revenue. Intel is still not profitable on a reported basis. It's not generating positive free cash flow, something that analysts don't see changing until 2027.

Starting point is 00:02:40 But what you mentioned, what happened in August when the U.S. said, all right, we're going to put $8.9 billion for a 9.9% stake in August. That's basically now worth more than $20 billion. So you, me, and Asit, we each owed about $60. If my math is correct, $60 worth of Intel, just as being a U.S. citizen. You have this case where there is that enthusiasm that, obviously, that's where the White House is coming from. But it is the kind of thing where now it has to prove it to me. Show me that you can do this. And I think that's the whole thing. Intel is doing a lot of right things. It had a great CES last week, a lot of buzz, but the results aren't there yet. And that's, I think, what we need to wait for to see if the run-up that the

Starting point is 00:03:18 stock has had, a monstrous run-up over the past year, is warranted. I mean, Asit, let's talk about at least part of the technical stuff that President Trump is talking about here. Intel in the United States is planning to bring online plants that will provide chip making in two distinct but very advanced processes, one called 18A, one called 14A. And the president did point out correctly that these are sub-two nanometer. 18A is 1.8 nanometer, 14A is 1.4 nanometer this is really small and the smaller the chip the more power efficient it can be sometimes you can put more uh more of these chips together on a wafer so you can create a more powerful chip the implication here is that these processes are going to be highly useful for things

Starting point is 00:04:12 like wait for it ai asset so how big deal is this do you think making essentially highly advanced chips here on U.S. shores? How much credit should we give Intel for this, knowing that it's not done yet, but they are working on it? Well, let's give Intel the credit up front for working on it. The U.S. ceded its most advanced chip-making capabilities to Taiwan years ago. Intel itself was the manufacturer at scale of our best technology when it came to chips and really just got off track in so many different ways. So this represents a comeback for Intel. If you ever hear that Intel's a comeback story, this is part and parcel of that.

Starting point is 00:05:05 And so where we get into these distinctions between 18A and 14A, it's really, to put it simply, you can imagine the same process, but getting more refined in stage two. So 18A is distinguished by really two things. So these nanosheet transistors, and then moving the power from sort of the front of the wafer to the back of the wafer. Okay. So nothing in 18A should be taken as that number represents some kind of smaller aperture or whatnot. As you said, it's really already a two nanometer and below process of very, very intricate designs on a chip. When you move from 18A to 14A, what's going to happen is these machines that ASML makes, it's most valuable machines. These are lithography machines that companies like Intel buy to write

Starting point is 00:05:57 onto silicon substrates. They're going to use their latest and greatest machines, which are high NA EUV machines. This is interesting because ASML has been waiting for its customers to adopt their latest technology. Funnily enough, it could be Intel that's at the forefront of that. But to get to 14A, and the reason why I'm going to this level of detail, it takes a lot. It's going to have to prove out this first process. Of course, they now have a processor that's recently been released that runs on 18A. It's going to take a while, Tim, to get to 14A for that process to be widely adopted by major players. This is why Rick says, look, the stock price is ahead of where the tech is just now. I'll point out NVIDIA. Great story here. They

Starting point is 00:06:48 invested in Intel also, $5 billion. They've been testing out 18A. They backed off, we heard in December from going any further in their test. Now, we shouldn't confuse this with NVIDIA getting really down on Intel's process. NVIDIA, in the first place, is using this for its CPUs. And to get to where it needs to for 1880 to be part of its GPU process flow, that development flow, it's going to take a lot. Intel's going to have to prove a lot. But they've got the money from NVIDIA. NVIDIA is a great partner for all the other stuff. So there's a lot for this story to work out in the future. I myself, full disclosure here, more than $60. I purchased some Intel early last year and have enjoyed the gains. But I realize,

Starting point is 00:07:36 as a rational shareholder, it's still got to come up with a major foundry partner. So more big players need to step forward and say, we're going to use this technology before we can feel that Intel's out of the woods. Yeah. I mean, we don't have a lot of Intel announcements about customers that are using the Intel foundry for manufacturing at scale their most advanced chips. We know that Amazon Web Services is doing this. We know that NVIDIA at least is trialing some things. What Intel has said is that they expect those most advanced chips, those 14A designs you were talking about, Asit, there will start to be decisions about manufacturing at that level in the first half of 2027. Say that three times fast. But essentially, maybe call it spring or late spring

Starting point is 00:08:27 of 2027. So we're not there yet, but it's early enough. Having said that, I mean, Rick, I'll start with you here. Intel Foundry, for really the past few years, has been a net zero in terms of contributor to Intel. So now that there's a chance that it's not going to be a net zero, are you buy, sell, or hold Intel on the promise that Intel Foundry, with doing business primarily here in the United States, is going to be a material contributor to Intel? Buy, sell, or hold based on the hope for Intel Foundry here, Rick? Yeah, so I'm excited that the Intel inside company that's sort of been the Intel outside looking in for so many years is back to having a nice primary seat, potentially a leader of this new revolution. The 18A is not only just

Starting point is 00:09:23 what we talk about gaming, but also AI, but also gaming and more power efficiency. These things that are matter. And so they're making a splash in here. It'll take a while to catch up with the NVIDIAs and the AMDs of the world in many ways. But I'm excited about all that. But again, And I'm happy with my $60 that I have, my share indirectly through being, I'm not so excited to jump on the stock now because it has run up so much. And even looking at the next year, it's not like investors are expecting. It will be a return to growth and a return to profitability, but it's just a very small step, not moving the needle yet. This is a long-term play. And I think as an investor, it's exciting. Intel is definitely a better company now than it was a year ago.

Starting point is 00:10:02 definitely the 10 months that Lip Butan has been CEO has been an amazing run for any incoming CEO and outsider CEO at that. But I do think I want to wait. And I think I can afford to wait because I think the stock will be volatile in the next year or two. And I think I'll be able to pick a better entry point. And hopefully at a point where some of these products and all this demand and the fact that they're saying, you know, demand is exceeding supply, something that we haven't seen in Intel in a long time. These things that are being said and happening are exciting. I want to see it bear out to actual reality. Yeah. So, Asit, Rick is pretty happy with his holdings as a U.S. citizen. You are a shareholder. So, are you buy, sell, or hold

Starting point is 00:10:42 those Intel shares? You maybe want to buy a little bit more on the promise of Intel Foundry? Yeah, Tim, I am a dollar cost average in buy on Intel. And I think Rick put it so wonderfully, that doesn't have to be dollar-cost averaging it every month this year. You could just wait. This business is going to be volatile, and the stock is going to be volatile to follow. But I have to say, let's give a lot of credit to Lee Pouton. This is a guy we knew about, Tim. He was the CEO of a esoteric company in the semiconductor industry on the design side, Cadence Design Systems. He has a master's degree in nuclear engineering from MIT. And he was on the board of Intel and just was uncomfortable with all the middle management

Starting point is 00:11:28 and inefficient use of resources when he was a board member. I think he's still on the board, but looking not as the operator of the business. And not only has he really set the future into motion, he's also proven to be good on the rubbing elbows side, the handshake side. I mean, he's been able to roll with the punches with the Trump administration. They got off to a very rocky start. He's sealed an investment from we, the taxpayers, and from NVIDIA. So I think he's showing that he brings a lot of tools to a very difficult turnaround. I will say that NVIDIA has many chances to fail. The competition doesn't slow down. So when we hear about them being able to get 14A moving, let's say, in 2027. That's so many months more they're losing to competition

Starting point is 00:12:21 competitors like AMD and those who are actual fabs like Taiwan Semiconductor. But on the other hand, if this does play out, if this story plays out the way it could, you have here on American soil a really specialized chip manufacturer that will see a ton of demand in the future because AI ain't going anywhere, Tim. We know that, right? If they can produce the chips here, that's a great revenue stream for Intel in the coming years, a chance for it to be great again. I caution anyone about getting too excited on this story in the very near term. I share Rick's caution on that. But I would say, if you have a little bit of risk tolerance and you study this business, averaging in, especially in those volatile periods where the stock gets

Starting point is 00:13:08 taken to the woodshed, that's not a bad strategy. All right. So like it, hold it, maybe a cautious buyer here. And Lee Bhutan got smarts real good is what we're hearing here. Up next, let's do some Mindset Monday. You're listening to Motley Fool Money. When you're a mid-sized business, you need every competitive advantage you can get. Like an AI solution that works for you, not against you. SAP Grow is built with AI embedded at its core, working across every system, and it's ready to go from day one, so you can hit the ground running. Bring it with SAP Grow, AI Cloud ERP for any size business. We're back with another Mindset Monday. This time, we're going to look at breaks, specifically the benefit of

Starting point is 00:13:59 a break from the market and from investing. Have you taken one recently? And if you haven't, why not? Breaks are on my mind, guys, because I just took one, a holiday break where I did a lot of things other than work or think about the market. I did buy and sell some stock, though, but that was in the context of plans made a while back. I think being able to disconnect from the market and daily business news proved pretty restorative for me, I have to say. Let's talk about this. How you do it, Asit and Rick, I'd be very curious. What's it like when you take a break from the market? Rick, I'll start with you here. Do you ever do this? are you conscious about taking a break from the market and from investing?

Starting point is 00:14:41 I am not. To me, it's the kind of thing where the market isn't just work, it's also fun, and it's also life. So, it's a lot of factors that it's not something that if you were working like a nine-to-five job that you don't like, and you're like, well, great, I get to take a vacation, so take a break that way. But there are times, of course, where I'm traveling with the family, uh and if i traveling far like we were in europe uh like two years ago uh for about a week or two i made i i there was no point for me to check in because i was at different market hours and everything was completely different and it felt great so i love that but i also was happy to get back into it but yes i do think it's important uh to take this break a break every once in a while

Starting point is 00:15:22 um especially if you are kind of like you know watching the stock market every passing tick on your stocks. That is not healthy for anyone, as we're all long-term investors, so in that regard. But again, I do cheat, even when I tell myself, I still have a little side eye, look, let me see, is CNBC playing at this hotel bar? It's probably not going to be on. But it is the kind of thing where, yeah, I can't really get away from it, but when I do, I'm thankful that I do it. I think I become a better investor by taking a break, just like you would with anything. If you can't crack a Rubik's Cube or any kind of puzzle or the New York Times crossword, take a break and look at it with fresh eyes a little while later,

Starting point is 00:16:06 and you're going to have a different approach that'll probably make you a better investor and a better person. I'm going to have some things to say about that, but Asit, I want to hear from you first here. When's the last time you took a market break? Yesterday. Now, yes, we're taping on a Monday. There was no market there in front of me on Sunday. But I did take a complete mental break, as I tend to do. I have a few passions outside of investing, Tim. I love to read. I like to write some fiction. I love to learn languages. But I'm not going to lie, either. The three of us have chosen this as our profession. So, we're pretty wired in all the time. And I think if I don't take that conscious break to chase my passions, it could easily be

Starting point is 00:16:49 something that I don't turn off. And so I wanted to just go over three quick ways that I take a break. One is to take a walk out in nature. I try to do that every day. The second is what Rick mentioned, which is travel. Anytime you pull yourself out of your normal rhythms, your daily rhythms and go somewhere else, it's a great way for your brain to disengage because your brain is disoriented. It's disoriented spatially. It's got a lot of new stimuli coming in. So that makes it easier to disconnect. And then the third is to get absorbed in something. I mean, for me, that's reading. Your brain is trying to problem solve when you think about the markets and whether you're professionals like the three of us or someone who is more nine to five and does

Starting point is 00:17:32 investing in his or her spare time. When your mind is there, it's really trying to figure out, okay, how do I achieve what I want to achieve? Why am I not having the success that I want? or, wow, this is great. I'm really exceeding my expectations, but it always sees investing as this problem, something to optimize. And the way that you actually can really help yourself solve that problem is to immerse yourself in other problems. So that could be the Rubik's cube, Rick sites, and it could just be letting yourself go into the flow of something else, music, art, literature, seeing friends, going out for a beer. All of those things are really great in helping you disconnect from this thing that's tugging at you. And I think it leads

Starting point is 00:18:13 to better results, or at least it has in my case. Nice. I like it. Well, a quick final thought on this. The greatest benefit, I think, of taking a break from the market is perspective. Removing yourself from the daily grind of news, stock movements, and more can help you to reframe your portfolio as a loose collection of businesses with plans and purposes you may or may not believe in and like following. That is something that's very valuable. It'll allow you to actually build a portfolio. Understanding what you like and where you still have questions is also a great way to not only steward your holdings, but also your Motley Fool membership, since we're here to help you answer as many investing and mindset questions as we can. If you have a mindset question you'd

Starting point is 00:19:00 like to get answered, please write to me at T-B-E-Y-E-R-S at fool.com. Tbuyers at fool.com. And you can be featured in a future show. Up next, we'll preview tomorrow. You're listening to Motley Fool Money. Don't you wish you could just hit skip on the worst parts of your life? You know, the same way you can skip an ad. I get it. I'm Siaya and I live in Ice Cove. I've made some questionable decisions that didn't end up the way I planned. and today i'm still figuring it out somehow things usually get worse before they get better apparently that's how i roll so bundle up and come along for the bumpy ride stream a new episode of north of north tuesdays on cbc gem all right for tomorrow's show emily

Starting point is 00:19:46 flippin will have jason hall and dan kaplinger so you want to be sure and tune in for some more coverage of the markets and just the the amount of uh and variety of of goofy things that are happening in the world there's there's uh there is a lot to get to and emily will be here to give it all to you uh so that's tomorrow emily flipping with jason hall and dan kaplinger as always people on the program may have interest in the stocks they talk about the motley fool may have formal recommendations for or against so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational

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Motley Fool Hidden Gems Investing - Intel Hits a 52-Week High: Time to Buy?

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