After a period of instability, Intel shareholders are seeing a positive return. However, the recent surge in the company’s stock price has led to concerns about its high valuation, reminiscent of the dot-com era over two decades ago. Intel is a multinational corporation and technology company that designs, manufactures, and sells central processing units (CPUs), as well as other related products. The company’s technologies are at the heart of computing devices worldwide.
Shares of Intel have rallied by 28 per cent this month, increasing its market value by approximately $US24 billion ($37.2 billion). This surge is attributed to reports of ongoing discussions with the US government regarding a potential equity stake in the company, coupled with plans for a $US2 billion investment from Japan’s SoftBank Group.
The surge has propelled Intel’s trading price to 53 times its projected profits over the next 12 months. According to data compiled by Bloomberg, this is the highest level since early 2002. The elevated valuation has sparked debate among market analysts, with some questioning the sustainability of the current stock price.
Wayne Kaufman, chief market analyst at Phoenix Financial Services, commented on the stock’s valuation. “The stock looks incredibly expensive here,” Kaufman stated. “That kind of multiple is a bet that the government will push Intel so hard on customers that it becomes a winner.”
