Potential for Growth: AI Laggard Stocks Intel and AMD Could See Increase in Second Half

According to Melius Research, Intel and Advanced Micro Devices (AMD) are predicted to see a rise in the second half of the year after being considered “AI laggards” in the first six months of 2024. The analysts noted a trend from the previous year where underperforming companies in the first half had a recovery in the second half, while some top performers experienced a slowdown.

Melius Research pointed out potential factors that could benefit AMD and Intel, such as Microsoft’s Copilot+ PCs and an iPhone 16 upgrade cycle for Apple. They also mentioned IBM’s strength in infrastructure software as a potential growth driver.

In terms of stock performance, Intel shares saw a more than 5% increase in Monday afternoon trading, reducing their year-to-date loss of over 30%. AMD shares also rose by 3%, with a 20% gain since the beginning of 2024. However, both companies are still lagging behind Nvidia, which has more than doubled in value during the same period.

Looking back at 2023, Melius analysts observed that companies considered “AI winners” in the first half of the year experienced a slowdown in the second half, while the initial underperformers made a comeback. They specifically mentioned Intel and Dell as companies that performed well in the latter part of 2023.

The analysts believe that the pattern seen in 2023 could repeat in the second half of 2024, with a potential turnaround for companies like AMD, Intel, Apple, and IBM. These companies, which struggled in the first half, could benefit from increased spending by tech giants on AI investments.

Melius analysts highlighted specific opportunities for AMD and Intel related to Microsoft’s upcoming PC Copilot+ launch, which could drive chip demand. Apple is expected to capitalize on AI with the introduction of iOS 18 and partnerships with organizations like OpenAI. IBM, on the other hand, is well-positioned in the infrastructure software sector to see growth.

In terms of stock performance, Apple and IBM shares were slightly up on Monday afternoon, showing an increase of nearly 18% and 8%, respectively, year-to-date.

Overall, Melius Research is optimistic about the potential for companies like AMD, Intel, Apple, and IBM to catch up and perform well in the second half of 2024, following a challenging first half. They anticipate a similar pattern to last year, where underdog companies showed resilience and growth in the latter part of the year.

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