Tag Archives: AAPL

Buy Intel Before It Brings Chip Production to America

Backed against the wall by the rise of Taiwan Semiconductor (NYSE:TSM), Intel (NASDAQ:INTC) is putting all its financial chips (and more) on the line, which has big implications for INTC stock.

An Intel Core i7 chip in clear packaging is placed next to a metallic Intel (INTC) sticker.An Intel Core i7 chip in clear packaging is placed next to a metallic Intel (INTC) sticker.

Source: dennizn / Shutterstock.com

CEO Pat Gelsinger has promised to bring half the semiconductor industry to the U.S. and Europe if governments cooperate. China’s rise as a technology power is being used to bring in government cash.

Intel has plans to spend $100 billion each in Europe and the U.S. over 10 years, but Gelsinger needs government subsidies to back his play. Intel had less than $25 billion in cash at the end of June, and nearly $32 billion in long-term debt against a market cap of $220 billion.

Chips on the Table

Markets remain skeptical. Taiwan Semi is now worth nearly three times Intel at $641 billion. It has mastered the ultraviolet techniques to bring circuit lines within just two nanometers of each other, while Intel just promises to learn how.

Chip-making gravitated toward China and Taiwan in recent decades because of lower labor costs and fewer environmental strings. Intel was part of the trend, with fabrication plants in Ireland, Israel, and Dalian, China. Intel also has assembly plants in Chengdu, China, along with Vietnam and Malaysia.

Now Gelsinger wants to reverse all that in a decade. He calls his plan Integrated Device Manufacturing (IDM) 2.0. It was launched with $20 billion for two new Arizona fabrication plants. Intel has since announced an ambitious fabrication roadmap, with circuit lines 2 nm or 20 Angstroms apart by 2025.

Gelsinger is also promising to remake Intel’s insular corporate culture. Intel is becoming a “foundry,” Gelsinger said, making chips for rivals as well as itself. He reportedly made a $30 billion pitch for Global Foundries, spun out from Advanced Micro Devices (NASDAQ:AMD) 12 years ago and now controlled by United Arab Emirates money. After expressing initial interest, Global is now preparing its own IPO, valuing itself at $25 billion.

A Rocky Present for INTC Stock

Intel’s present is nothing like Gelsinger’s promise.

Intel’s current chips keep losing share to AMD in the data center. They use too much energy, says Cloudflare (NYSE:NET), which rejected Intel chips for its homebrew servers. Cloud czars like Apple (NASDAQ:AAPL) are also starting to produce their own chips, using designs from Arm Holdings, which Nvidia (NASDAQ:NVDA) is trying to buy from Softbank (OTCMKTS:SFTBY).

Right now, Intel is a no-growth company in a fast-growing industry. Second quarter net income of $5.1 billion, $1.24 per share, was little changed from 2020. Revenue of $19.6 billion was flat, too. By contrast Taiwan Semi sales grew almost 20%, and net income by 11%, in its second quarter report. The Taiwanese company is matching Intel’s moves in Arizona with a $12 billion investment, but still makes most of its chips in Taiwan.

China’s growing threat to take over Taiwan as it did Hong Kong this year is giving Gelsinger his chance. Intel is not only working with governments on subsidy arrangements but with Taiwan Semi itself, which will produce 3 nm chips for Intel starting in 2022. Chinese plants, by contrast, are still making chips with circuit lines 14 nm apart.

The Bottom Line on INTC Stock

If Gelsinger’s plans come off, Intel stock is dirt cheap. Despite paying a dividend that yields 2.6%, Intel is now worth less than half fab-less Nvidia and nearly twice AMD. Analysts haven’t gotten on board, either, with 7 of 26 at Tipranks telling customers to sell INTC stock and only 9 saying buy it.

For the first time since the 1970s, then, Intel stock is a speculation. But I shudder to think what might happen to America’s global competitiveness if Gelsinger’s plans fail. I’m a buyer.

On the date of publication, Dana Blankenhorn held long positions in NVDA, TSM, AAPL and INTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

3 of the Best Warren Buffett Stocks You Can Buy Now

Legendary investor Warren Buffett’s holding company, Berkshire Hathaway (NYSE:BRK.B), just released its latest 13F regulatory fling with the Securities and Exchange Commission. As always, the filing is being closely scrutinized by both professional and amateur investors to see which so called “Warren Buffett stocks” are on the move.

Given his track record of beating the performance of the S&P 500 stock index, Buffett’s investment moves serve as a litmus test for people on Wall Street and Main Street who carefully review Berkshire Hathaway’s massive portfolio and try to replicate its returns.

7 Infrastructure Stocks to Buy as the $1 Trillion Flows In

However, while Buffett moves in and out of stocks, there are many securities that he has held onto for years and continues to buy more shares of. In this article, we look at three of the best Warren Buffett stocks investors can buy right now.

Kroger (NYSE:KR) Apple (NASDAQ:AAPL) Restoration Hardware (NYSE:RH)

Warren Buffett Stocks: Kroger (KR) the outside of a Kroger (KR) storeSource: Jonathan Weiss / Shutterstock.com

Berkshire Hathaway only added to a few of its positions in this year’s second quarter, and the most new shares it bought were of grocery retail chain Kroger. In its latest regulatory update, Berkshire Hathaway disclosed that it purchased nearly 11 million additional shares of KR stock during the quarter ended June 30, bringing its total holdings to 61.8 million shares worth $2.68 billion.

Buffett’s company has been steadily adding to its Kroger stake over the past year, even as the pandemic created economic uncertainty.

Scrutinizing Kroger’s financials, it should come as no surprise that the Cincinnati, Ohio-based grocer is one of the favored Warren Buffett stocks. Kroger has many of the attributes Buffett likes in a company and stock. Kroger consistently reports strong earnings that top analysts’ estimates.

In its most recent quarter, Kroger reported revenue of $41.3 billion and earnings per share of $1.19, well above analysts’ average forecast for $39.8 billion in revenue and EPS of $1.01.

However, what Buffett really likes about Kroger is likely its dividend. Following its most recent quarterly results, Kroger announced that it is increasing its quarterly dividend payout by 17% to 21 cents per share. The latest dividend increase is up significantly from raises of 12.5% and 14.3% in 2020 and 2019.

With his current holdings of KR stock, Buffett will earn nearly $13 million each quarter from Kroger’s dividend payout.

Apple (AAPL) A close-up shot of the Apple Pay pageSource: Bloomicon / Shutterstock.com

Buffett didn’t invest in Apple until 2016. But since then, the Oracle of Omaha has been making up for lost time. Today, AAPL stock is the biggest holding in Berkshire Hathaway’s portfolio.

The holding company owns more than 907 million shares of Apple stock worth $137.15 billion. Clearly, Buffett has become a convert and rabid fan of the consumer technology giant. Notoriously fickle when it comes to technology stocks, Apple is one of the few tech securities that Berkshire Hathaway owns and the company has only added to its position in recent years.

The investment in AAPL stock appears to have been a shrewd move. As Apple became the first ever publicly traded company to achieve a $2 trillion market capitalization, Buffett’s Berkshire Hathaway cashed in.

In his annual letter to shareholders this past spring, Buffett disclosed that Berkshire Hathaway has made $100 billion on Apple stock in just five years of owning it, making it, literally, the best investment of the 90-year-old investor’s career.

Warren Buffett Stocks: Restoration Hardware (RH) Restoration Hardware storefrontSource: shutterstock

One of the other stocks that Berkshire Hathaway increased its stake in during the second quarter of this year was upscale home furnishing company Restoration Hardware.

Buffett’s Berkshire Hathaway first invested in RH in the third quarter of 2019, buying an initial stake of 1.1 million shares. Since then, Buffett has bought a total of 1.8 million shares worth $1.28 billion. The investment has been another success, with RH stock having risen 62% so far in 2021, and grown 309% since Buffett first opened his position.

RH stock performed well during the pandemic as people furnished new houses they had bought or upgraded the furniture in existing homes. And the stock has also performed strongly this year as the economy reopens and consumers spend their federal stimulus checks.

With RH stock now trading for $715, Buffett’s enthusiasm for the stock has not diminished. In the second quarter, Berkshire Hathaway bought an additional 35,519 shares of RH stock, one of only three holdings the company increased in the period.

On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.