Key Takeaways
- Melius Research said Intel and Advanced Micro Devices could rise as part of a “catch-up” in the second half of the year. The two companies, along with Apple and IBM, were among the “AI laggards” analysts named for the first half of 2024.
- Analysts noted a pattern in 2023 where “underdogs” fell short of expectations in the first half and then caught up in the second half, while some “AI winners” experienced the opposite effect.
- Melius said AMD and Intel stand to benefit from Microsoft's Copilot+ PC, Apple stands to benefit from the iPhone 16 upgrade cycle, and IBM stands to benefit from its infrastructure software strength.
Intel (INTC) and Advanced Micro Devices (AMD) could see share prices rise in the second half of the year, according to Melius Research, which called the two companies “AI laggards” earlier this year.
Intel shares were up more than 5% in afternoon trading on Monday, paring a more than 30% decline this year. AMD shares rose 3%, and are up 20% so far in 2024. The chipmaker has outpaced the S&P 500's nearly 17% gain this year but has lagged far behind Nvidia (NVDA), which has more than doubled in the same period.
Will the second half of 2024 look similar to 2023?
Melius analysts noted that the “AI winners” in the first half of 2023 stagnated in the final six months of the year, while the “underdogs” in the first half of the year benefited.
They point to the VanEck Semiconductor ETF (SMH) as an example, which rose 50% in the first half of 2023 but only gained 15% in the second half of 2023. Meanwhile, they said stocks of companies like Intel and Dell performed well in the second half of last year.
Melius analysts said a similar pattern could be seen in the second half of 2024.
AMD, Intel, Apple and IBM may “catch up” in the second half of the year
“We believe we will see some 'catch-up' deals in semiconductors, hardware and even software as increased spending on artificial intelligence (AI) by large tech companies may not be as big a factor later this year,” Melius analysts wrote.
They cited AMD, Intel, Apple (AAPL), and International Business Machines (IBM) as companies that underperformed in the first half of the year but could benefit from a “catch-up.”
Melius analysts said AMD and Intel could benefit from having their chips in Microsoft devices, as Microsoft plans to launch a “recall” feature on Copilot+ PCs, which could be “the closest thing we have to a 'killer app' reason to upgrade.”
Analysts say that Apple is preparing an upgrade cycle for the iPhone 16 that will include AI. At its developer conference in June, Apple unveiled iOS 18, which will feature Apple Intelligence and an AI partnership with OpenAI.
Analysts said infrastructure software could be well positioned to benefit, singling out IBM in that space in particular.
Shares of Apple and IBM edged higher on Monday afternoon, up about 18% and 8%, respectively, since the start of the year.
