Intel surges, analysts are baffled

Intel's stock price surged 7% against the market trend, but there are "no substantial positive factors."

On Tuesday, Intel's stock price suddenly rose 7.2% to $23.59, standing out against the backdrop of a market decline, but this increase was not driven by any clear news, leaving analysts puzzled.

Although the market generally focuses on rating adjustments from Wall Street or official company statements, Intel's rise did not coincide with such triggering events.

Citigroup analyst Christopher Danely raised the target price on Monday but did not change the "hold" rating, and this adjustment did not align with the timing of Tuesday's surge.

Market speculation suggests that the rotation in the semiconductor sector and short covering may have provided some support for Intel's stock price.

Semiconductor Sector Rotation Effect Evident

One possible explanation is the capital rotation within the semiconductor industry.

Mizuho Managing Director and technology expert Jordan Klein stated that recent market funds flowing into the semiconductor sector may have bolstered Intel's stock price.

Data shows that over the past month, the average return of semiconductor stocks in the Russell 3000 index was about 10%, but they still fell about 23% over the past 12 months. In contrast, Intel's stock price rose about 15% in the past month, but it has dropped 31% over the past 12 months.

This "catch-up" phenomenon indicates that Intel may benefit from the industry rotation.

Short Covering May Boost the Surge

Short covering could be another potential driver. Short sellers borrow stocks and sell them, hoping to buy them back at a lower price after the stock price declines for profit.

According to Bloomberg data, the average short position ratio for semiconductor stocks in the Russell index is about 7%, significantly higher than the average level of about 3% for the S&P 500 index.

Intel's short position ratio is about 3%, which, while not astonishing, still makes it a relatively popular short target. However, considering Intel's market capitalization of over $100 billion, the total value of shorting this stock is about $3 billion, making it one of the most shorted stocks in the semiconductor sector.

In contrast, although Nvidia has a short position amounting to about $30 billion, the highest in the sector, its nearly $4 trillion market capitalization results in a short position ratio of less than 1%.

Despite the impressive stock performance, Intel's reputation among analysts is poor.

Currently, only 6% of analysts give Intel a "buy" rating, far below the average "buy" ratio of 63% for semiconductor stocks in the Russell 3000 index. The market remains cautious about Intel's long-term prospects, with some investors even viewing it as a hedge against risks in the tech sector