To answer the issue of whether Intel stock (NASDAQ:INTC) is at the bottom, the best answer right now is yes, but it’s too soon to start investing huge sums of money in the company.
The market was taken aback by Mobileye’s announced spin-off and valuation difficulties, which may knock on share prices in the short term. Long term, the spin-off is a wise move by the company’s new CEO, positioning it to compete with AMD (NASDAQ: AMD), NVIDIA (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM), and now Taiwan Semiconductor (NYSE: TSM).
Market Analysis of Intel Stock
Intel paid $15.3 billion for Mobileye approximately six years ago and is now on pace to sell a part of its interest at cost. The company’s IPO value has been cut from the previously anticipated $50 billion to as little as $14.4 to $16 billion today. The implication is that Intel will raise around $820 million at the top of the revised range while maintaining 95% control of the firm.
Intel stock (NASDAQ:INTC) may not be at rock bottom, but patient investors may reap some benefits. The company is selling at a discount to both the broader market and the semiconductor sector (NYSEARCA: SOXX), and it has one of the highest, if not the highest, yields in the whole industry. The company is selling at less than 12X its earnings forecast and yields more than 5.5%, compared to a higher 15.5X for the S&P 500 (NYSEARCA: SPY) and anywhere between 15X and 35X for companies such as Advanced Micro Devices and NVIDIA. Add in the prospect of dividend growth, and the stock is almost too appealing to pass up at present prices, which is most likely why analysts continue to hold the shares.
With everything in play, the potential for a significant comeback is considerable if the stock does bottom.
Vivek Arya, an analyst at Bank of America (NYSE: BAC), is wary of Intel stocks (NASDAQ:INTC) recovery attempts due to “fundamental weaknesses” that mere cost-cutting would not address. On the plus side, Arya feels Intel stock (NASDAQ:INTC) is best positioned to thrive with a foray into the foundry business. “Intel is the only US-based provider that might even come close to that target in the next years.”
The Technical Outlook: Could This Be The Bottom?
Since the new CEO took over, Intel stock (NASDAQ:INTC) has been in a severe and steepening slump, but it may be reaching the bottom. The price behavior is consistent with an overextension, which should result in a robust comeback, if not a true, long-term bottom. Along with the downward arc, the move is followed by a weak divergence in the MACD and a bullish crossing in the stochastic, both of which are emerging at very oversold levels. On the other hand, recent behavior may be establishing a bearish flag, which might send the stock down another candle or two before it’s done. If there is no other news, the earnings report at the end of October will be the next significant driver for the stock.
Featured Image – Megapixl © Wolterk
Author Okoro Chinedu 
