Palantir's AI Stock Status in Jeopardy: What's Next?

Palantir Technologies stock has experienced a sharp sell-off, ending its powerful run and potentially jeopardizing its top spot in the IBD 50. The AI stock has lost its luster, but shares ended a six-session losing streak. Investors should watch for a change in character in the AI stock.

SoftBank's recent $2 billion investment in Intel signals a strategic bet on the AI-driven semiconductor recovery, leveraging Intel's manufacturing legacy and R&D capabilities [1]. This move is part of a broader trend as artificial intelligence reshapes global technology demand, pushing investors to identify undervalued giants poised to capitalize on this seismic shift.

Intel's Q1 2025 AI revenue of $4.1 billion, while trailing NVIDIA's $39.1 billion, highlights growing relevance in AI servers [1]. The Gaudi 3 AI accelerator, though underperforming relative to AMD's MI325X or NVIDIA's Blackwell, is a stepping stone in Intel's AI journey. Intel's recent Q2 revenue beat of $12.9 billion also hints at improving cost discipline and a clearer AI roadmap [1].

The market valuation paradox is evident: Intel trades at a forward P/E of 222, a staggering multiple that reflects both optimism and skepticism [1]. This creates a paradox: Intel is both overvalued and undervalued, depending on your time horizon. AMD's forward P/E of 53 and NVIDIA's 58 suggest investors see these companies as more reliable earners, yet Intel's price-to-book ratio of 1.10 indicates it's trading near tangible asset value, not growth expectations [1].

SoftBank's investment adds credibility to Intel's long-term vision. By committing $2 billion without demanding board seats or chip purchase commitments, the Japanese conglomerate signals confidence in Intel's ability to adapt to the AI revolution [1]. This is a departure from typical activist strategies and suggests SoftBank sees a path to value creation through patience and strategic alignment with U.S. manufacturing goals.

The semiconductor industry is undergoing a structural shift, driven by AI. The top 5% of companies—NVIDIA, TSMC, Broadcom, ASML—account for all economic profit in 2024, while the middle 90% struggle to generate value [1]. Intel's expertise in manufacturing and recent partnerships position it to capture a slice of the growing edge computing market.

Investing in Intel isn't without risks. Its AI accelerator business is still unproven, and leadership changes have created uncertainty [1]. The foundry segment faces delays and competition from TSMC. However, the AI boom is here to stay, and Intel's $99.67 billion market cap suggests there's room for growth if the company can execute [1].

SoftBank's investment, combined with Intel's recent Q2 beat and government support, could catalyze a turnaround. For investors willing to stomach short-term volatility, Intel represents an undervalued play on the AI transition.

References:
[1] https://www.ainvest.com/news/softbank-2-billion-intel-stake-strategic-bet-ai-driven-semiconductor-recovery-2508/