Intel Plunged Again Today — Is Artificial Intelligence (AI) Making The Stray Stock A Buy?

Intel (INTC -6.12%) shares suffered another day of selling on Thursday. The chip company’s share price ended the daily session down 6.1 percent, according to data from S&P Global Market Intelligence.

Intel lost ground again as investors weighed the possibility that the company would not proceed with construction of two semiconductor manufacturing plants in Germany. Nothing has been officially announced to suggest that construction plans have been scrapped, but investors have been kept in the dark about the project.

The two plants were expected to be operational in 2027 and cost about $33 billion to build — a third of the cost covered by the European Union. And while Intel hasn’t provided much information about the future of factories, Taiwan Semiconductor Manufacturing announced earlier this week that construction has begun on a new $11 billion plant in Germany — with the EU covering half the cost.

Following today’s pullback, Intel shares are once again trading just above a 10-year low. Is the downed company an undervalued artificial intelligence (AI) play or an aging behemoth that will fail to deliver earnings for investors?

Betting on the future of Intel AI means accepting uncertainty

Improving Intel’s manufacturing capabilities has become a key economic and national security interest for the US, EU and other aligned countries. While there is a good chance the company will receive additional government funding to build new factories, the push to grow its contract manufacturing business comes at a difficult time. Building and maintaining factories is capital-intensive, and Intel is in the midst of a massive cost-cutting campaign that includes laying off 15 percent of its global workforce, suspending dividends and selling investments.

Efforts to become a leading designer of high-performance processors for data centers are still not paying off much, and the recent introduction of AI PCs has actually created margins against it, rather than being a profit driver that some expected. Artificial intelligence is not yet profitable for computer and server businesses, and the manufacturing unit generates high costs. Intel has delivered a barrage of bad news for investors lately, and there isn’t much visibility into whether the company’s turnaround strategy will succeed.

With the stock down 60% year-to-date and 71% from its 10-year high, the semiconductor specialist may appeal to risk-tolerant investors looking for contrarian plays with explosive upside potential. Intel still has the benefit of strong business relationships, and government support could eventually help it build a strong, fabulous business. But if you’re waiting for signs that a comeback is on the way and that Intel will be an AI winner, the company hasn’t delivered yet.