Wall Street’s sentiment swing on Intel (NASDAQ:INTC) stock has been mind-blowing. A year ago, analysts and stock traders declared Intel a company in decline. Now they’re continually coming up with reasons to raise their price targets.
That’s not just a figure of speech; analysts with Truist, Mizuho and Tigress Financial all just raised their price targets on INTC stock. It’s an astounding turn of events, considering Intel was once a target of derision as it lost market share to Advanced Micro Devices (NASDAQ:AMD).
However, Intel came back into the market’s favor in the second half of 2023 as CEO Pat Gelsinger shifted its focus to artificial intelligence (AI) chips. You may have heard about Intel going all in on AI chips for personal computers (PCs), but that’s not the only big move the company’s making in 2024.
Intel’s head-turning acqusition
For the most part, Intel’s “AI everywhere” strategy has involved a push to develop AI chips for PCs. However, at the recent Consumer Electronics Show (CES) in Las Vegas, the chipmaker announced an acquisition that will bring its “AI everywhere” theme to cars and trucks.
Yesterday, Intel announced at CES that it’s acquiring fabless silicon and software company Silicon Mobility. Based in France, Silicon Mobility produces system-on-chips (SoCs) for intelligent electric vehicle (EV) energy management.
This was big news at what Barron’s described as a “largely news-free press conference at the CES trade show.” If the event felt like an “AI pep rally,” Intel was certainly among the lead cheerleaders with its Silicon Mobility buyout announcement.
Of course, Intel’s management didn’t let anyone within earshot forget about their focus on AI-compatible PC chips.
At CES, Michelle Johnston Holthaus, general manager of Intel’s client computing group, declared, “AI is everywhere, transforming, reshaping and reimagining the PC experience.”
Yet, the Silicon Mobility acquisition will enable Intel to bring its high-powered chips outside of homes and offices and into people’s vehicles. The financial terms of the buyout aren’t yet known to the public, but Intel’s foray into intelligent SoCs for EVs signals the potential for new, significant revenue sources.
AI PCs in your car?
The planned acquisition of Silicon Mobility wasn’t Intel’s only eyebrow-raising announcement at CES. The company also revealed that it wants to bring its AI PC experience to your car.
Don’t take this too literally. Intel isn’t looking to install a PC in your car or truck, but it does want to utilize the “AI acceleration capabilities” of its PC chips to “enable the most desirable in-vehicle AI use cases, such as driver and passenger monitoring.”
All of this might sound futuristic and even far-fetched. Yet, it’s already becoming a reality as Intel has already found a major automotive client for its PC-style AI chips for cars.
Zeekr, a Chinese automaker owned by Geely (OTCMKTS:GELYY), will use Intel’s software-defined vehicle (SDV) SoCs. Intel claims this will “bring enhanced GenAI living room experiences to next-generation vehicles.”
Intel’s press release didn’t provide much color on exactly what an in-vehicle, AI-enhanced “living room experience” would look like. However, it did specify that Intel and Zeekr will “enable next-gen experiences customers demand, such as generative AI-based voice assistants.” Moreover, in a briefing with reporters, Jack Weast, general manager for Intel Automotive, reportedly suggested that automotive gen-AI voice assistants could help drivers find a nearby EV charger or Starbucks (NASDAQ:SBUX).
Do car and truck buyers actually “demand” gen-AI voice assistants? Press releases aren’t doctoral dissertations, so investors shouldn’t expect Intel to provide research-based evidence of this. Still, it remains to be seen whether the AI-enabled “living room experience” will set a new standard for car buyers’ expectations.
What this means for INTC stock investors
Clearly, Intel made a splash at CES with its Silicon Mobility buyout announcement and talk of in-vehicle “GenAI living room experiences.” At the very least, it’s an indication that Intel isn’t just going to sit back and let AMD, NVIDIA (NASDAQ:NVDA) and other rivals commandeer the future of the automotive AI chip market.
By itself, this isn’t a sufficient reason to buy and hold INTC stock. Automotive AI chips could provide a revenue source for the chipmaker, but it’s not the be-all and end-all. It’s just another factor to consider if you’re already bullish about Intel’s long-term recovery story, which could take years to play out.
Disclaimer: All investments involve risk. In no way should this article be taken as investment advice or constitute responsibility for investment gains or losses. The information in this report should not be relied upon for investment decisions. All investors must conduct their own due diligence and consult their own investment advisors in making trading decisions.
