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Buy Intel Stock Later, Not Now


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Buy Intel Stock Later, Not Now

This was supposed to be the year that chipmakers, including Intel (NASDAQ:INTC), regained their footing. In 2019, uncertainty regarding U.S.-China trade battered chipmakers’ stocks. Then companies had to cope with a slower-than-expected 5G rollout. But all of that was supposed to be behind the chipmakers. And Intel stock had a valuation that made it more attractive than other chip firms.

Wait for Market Uncertainty to Cool Before Buying Intel Stock

Source: Sundry Photography / Shutterstock.com

However markets can change in a minute. And over the last week, the stock market has shown that when momentum changes, it can take on a life of its own. The shares of Intel, like those of its competitors such as Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA), have dropped into correction territory.

Microsoft (NASDAQ:MSFT) announced what many analysts had already expected. Specifically, the software giant reported that its supply chain, which is heavily dependent on China, was going to take longer than expected to get up and running.

In Other News, Intel Made a Major 5G Announcement

In a news cycle like this one, it can be hard to react to anything else. But on Feb. 24, Intel did make a major announcement regarding its intention to be at the forefront of the 5G revolution. It also launched several new products One of its new products is the Atom P5900, a 10nm system-on-chip (SoC) for wireless base stations. The chip may be the most important new product that Intel launched last month.

Navin Shenoy, Intel’s executive vice president and general manager of the Data Platforms Group said, “As the industry makes the transition to 5G, we continue to see network infrastructure as the most significant opportunity, representing a $25 billion silicon opportunity by 2023. By offering customers the fastest and most effective path to design, deliver and deploy 5G solutions across core, edge and access, we are poised to expand our leading silicon position in this growing market.”

In addition to the Atom P5900, Intel also unveiled its 2nd Generation Xeon scalable processors and the Diamond Mesa, the company’s first next-generation structured ASIC for 5G network acceleration. Further, Intel introduced its Ethernet 700 Series network adapter, which will be the first 5G network-optimized Ethernet NIC.  Intel also announced strategic collaborations with other industry leaders meant to help facilitate the 5G transformation.

When Will It Be Safe to Buy Intel Stock?

Unfortunately for Intel stock, it may take some time for the company to meet its growth targets. I like Intel as a long-term play. It has an attractive valuation and a product pipeline that puts it in a leadership position when it comes to 5G. And, to be fair, during the market’s recent downturn, Intel stock has fared no worse than the overall stock market.

However, that means if the market continues to decline, so will Intel stock. And as Todd Shriber wrote in a recent article for InvestorPlace, that is a paradox for investors to work through. Furthermore, another InvestorPlace contributor, Thomas Niel, makes a compelling argument that, despite its attractive valuation, Intel stock may drop further . In fact, Niel says that the stock could could easily fall below $50, versus its current price of $57.85.

With the coronavirus from China spreading, all of us who enjoy the markets are holding our collective breaths. We hope for the best. We prudently plan for the worst. Intel deserves a place on investors’ watch lists, but it’s hard to find a compelling reason to buy the stock right now.

As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.

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