Intel Stock: A Value Play in the Quantum Computing Space

Key Points

• Out of all the stocks involved in the quantum computing race, Intel stock offers one of the best upside setups in the industry for investors to watch.
• Some catalysts, both at the industry and company levels, make Intel an interesting buy today.
• Institutional investors and Wall Street analysts agree with a double-digit upside for the stock, to say the least.

More and more market participants are becoming aware of the quantum computing trends popping up in the technology sector right now. What used to be the hot topic of artificial intelligence has now shifted into the next frontier for the industry. The capabilities and profit potential aren’t known yet, as the technology is still new.

However, one thing is certain, most – if not all – stocks dealing with supporting the future of this technology will likely see their stock prices rally significantly from where they trade today. Still, not all stocks are made equal in this niche, as names like Nvidia Co. NASDAQ: NVDA already trade at high premiums relative to their historical averages, so that most of the upside still due to come from supporting quantum computing might already be priced into the stock today.

Unlike Nvidia, other names in the market offer a more sensible entry into the quantum computing future, such as Alphabet Inc. NASDAQ: GOOGL or even Advanced Micro Devices Inc. NASDAQ: AMD, which offer a much more attractive valuation relative to Nivida and other leaders. However, none of these stocks offer the sort of value—or catalysts—that can be found in shares of Intel Co. NASDAQ: INTC today, which makes it the best buy.

Intel Stock’s Exposure to Quantum Computing Can Propel it Higher

Intel is known for having one of the leading extreme ultraviolet (EUV) lithography for chipmaking. These technologies will become all the more important once the new United States administration takes office and places its announced additional curbs on technology.

These restrictions would narrow the supply of chips and semiconductors away from China and Taiwan, making the world more dependent on American-made chips. This trend will definitely help Intel, as it has been building factories across Arizona and Ohio with government funding behind it, given how important the company is to the supply chain.

When it comes to quantum computing exposure, Intel has developed its Tunnel Falls chips alongside another product line called Tangle Lake. While Google got the head start in announcing its first quantum computer, Willow, Intel will be tasked with supplying some of the chips needed to keep making such computers.

There have been signs of potential institutional accumulation in Intel from such trends, as pointed out by the volume profile in the stock showing that most of the past 12 months’ volume concentrated around the $22 to $22.50 per share range.

Apart from volume readings, investors can check the institutional ownership reports for Intel, showing those at State Street boosting their positions in Intel stock by as much as 2.8% as of November 2024, bringing their net holdings to a high of $4.6 billion or 4.6% ownership in the company.

Wall Street Anticipates Intel Stock Rally Driven by Key Catalysts and Strategic Developments

From these recent institutional positionings, or accumulations, in Intel stock, Wall Street analysts might have arrived at a few reasonable catalysts to explain what's happening behind the scenes here. One of the drivers is already clear: Chinese export curbs will prioritize American chips for markets, but there's a lot more to it.

Intel's CEO, or former CEO Pat Gelsinger, has recently stepped down from his role and suddenly retired. While this might have been a bearish point for the stock in recent weeks, the uncertainty is probably already priced in by now, considering that Intel stock now trades at only 39% of its 52-week high prices.

More than that, when the new management head is inevitably announced, the certainty will likely propel the stock higher to a more fair valuation. Even better yet, there might be a catalyst to get investors a higher price before a CEO is announced.

Another industry giant wants to buy Intel. Qualcomm Inc. NASDAQ: QCOM approached Intel over the past two quarters, reaching with a takeover bid. Considering where Intel trades today, acquiring the company's future expected earnings at this price would be a no-brainer.

According to Wall Street analysts, earnings are expected to swing from today's net loss per share of $0.46 to achieve net earnings per share (EPS) of up to $0.29 12 months from now. This type of swing would ultimately justify the current $30 a share consensus price targets analysts have placed on Intel stock, if not more.

With a 50% upside potential riding on its back, Intel stock still commands a forward P/E ratio of 21.4x today, which is awfully close to Nvidia, Advance Micro Devices, and others. As the market is trying to say, this means that they are willing to pay the same premium for Intel as its competitors today, despite the stock trading so cheaply.

There's always a reason behind that behavior, and connecting it with the recent accumulations can lead investors to conclude that Intel stock might be the best buy in the future of quantum computing.