Intel stock: Analysts are expecting multi-year highs

Key Points

• Intel's 2023 rally still has legs, and 2024 looks just as bright. 
• Several key tailwinds are in place, which should support a push for all-time highs.
• Even with recent gains, Intel's valuation remains attractive.

After falling more than 50% in 2022, last year really was all about the recovery for shares of Intel Corporation NASDAQ: INTC. They climbed throughout the year, finishing up about 100% from their February low. As the markets settle into 2024, expectations are high for that trend to continue. 

It will be a while before Intel is a serious threat to the likes of Nvidia Corporation NASDAQ: NVDA, which has emerged in recent years as the undisputed chip leader, but that doesn't mean there's not a ton of opportunity still to be had in the Santa Clara headquartered company's stock.

Bullish tailwinds

While Nvidia has been printing all-time highs for fun in recent months, Intel is still working to reclaim 2021's peak but is looking good to do it this year. Just before the holidays, the team at Raymond James reiterated their Outperform rating on Intel shares. The refreshed outlook came following an investor dinner, from which analysts came away impressed with Intel's roadmap potential and steep margin trajectory heading into 2024. Also of note was the opportunity in artificial intelligence (AI), where Intel has emerged as a strong contender. 

The move echoed that of Mizuho Securities, who also came out strong on Intel last quarter. The team there upped their rating from Neutral to Buy and are expecting 2024 to be one of their best innings in recent years. Key drivers identified by the Mizuho team include the company's roadmap and the start of an upcycle across the PC and data center industry. 

Having endured a pretty bleak couple of years since peaking during the pandemic, strong earnings growth is once again back on the table for Intel. Much has been made of the prospect that interest rates have peaked, and with inflation readings continuing to cool, talk has now turned to when the Fed might actually start cutting them. For high-tech stocks like Intel, this can only be good news as falling rates fuel a risk-on environment, which almost always benefits tech the most. 

Indeed, it was the improving market conditions that helped convince the team at Argus Research last week that Intel shares are on track to hit $60. This is a street-high price target and would put Intel shares back at multi-year highs were they to hit that in the coming weeks. It would also put them within a 20% move of an all-time high, a distance that Intel shares would have little difficulty covering, especially if conditions keep improving across the broader equity market and the bigger players like Nvidia keep rallying. 

Attractive valuation

You'd be forgiven for wondering if the better play is just not to load up on Nvidia shares. After all, they're the ones back at all-time highs and holding Wall Street's attention. You probably won't go too far wrong with that approach, but there's a strong argument to be made for Intel as the better investment when valuations are considered. 

Nvidia's year-long rally has done wonders for investors, but it's also made things quite frothy on that front. Take their forward price-to-book ratio, for example. At 27, it's over six times greater than the sector median of 4. Intel, on the other hand, has a forward price-to-book ratio of less than 2, making it incredibly attractive relative to its peers and especially to Nvidia. 

Of course, there's a lot more to a stock than how it ranks on valuation, but this bolsters the argument for Intel being considered as an option despite it lagging Nvidia on share performance. The fresh $60 price target from Argus is also quite attractive and lends weight to the argument that Intel's recovery is only gaining momentum. Tuesday's 5% looks to be some standard profit-taking and, in fact, will do the stock no harm at all as some consolidation is needed after last quarter's move. Look for shares to be snapped up around the mid $40s and then to turn north once again.