Intel (NASDAQ:INTL) saw a significant increase in premarket trading on Tuesday, with the stock rising more than 6% to reach a two-month high the day before. This positive movement in Intel, along with other large-cap chipmakers, contributed to the S&P 500 and NASDAQ closing at record highs on Monday. Companies such as Taiwan Semiconductor Manufacturing Company (TSMC), NVIDIA, and Marvell Technology also experienced gains, with TSMC briefly crossing the $1 trillion valuation mark.
The surge in technology and artificial intelligence companies on Monday was partially driven by new US employment data that suggests lower interest rates may be in favor. The global semiconductor industry has been leading the tech sector’s rally over the past year, with continued demand for AI chips offsetting mixed demand from other segments like smartphones and PCs. Analysts believe that the upside potential for chip stocks remains high, as big tech companies continue to invest in AI infrastructure, leading to faster revenue growth and stronger balance sheets for chip stocks.
Analysts have raised their price targets for top chip stocks, such as Intel and TSMC, based on expectations for continued growth in the AI sector. Despite the positive outlook, investors are cautioned to be wary of volatility in the chip industry, as seen in recent market fluctuations impacting companies like NVIDIA and TSMC. Concerns have been raised about the potential overheating of the semiconductor segment, with some analysts suggesting that chip stocks may be in a bubble.
While chip stocks are generally viewed as solid investments due to the growth potential in the AI industry, investors are advised to monitor market volatility and exercise caution, especially as earnings season approaches. It is important for investors to stay informed and closely follow developments in the chip sector to make informed decisions about their investments.
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