Insider Insights: What Intel CEO’s Big Bet on INTC Stock Tells Us

Stock Market

Insider stock purchases are notable because they signal confidence in the company. So, investors should pay attention if an executive at Intel (NASDAQ:INTC) made a large-scale share purchase. This, along with Intel’s ambitious sales outlook, are reasons to consider INTC stock now.

As we’ll see, Intel’s most recently released quarterly results weren’t perfect. There are notable bright spots, however. By the end of 2023, Intel could turn out to be the semiconductor segment’s greatest turnaround story — and you still have a chance to invest, like one particular executive did, at a reasonable share price.

Who’s Buying INTC Stock?

Earlier this year, Intel was in Wall Street’s doghouse. The company had lost market share to rival chipmakers. And, it was an unforgivable sin for Intel to post its first unprofitable quarter in a long time.

How did Intel CEO Pat Gelsinger react to all of this? He bought 8,200 Intel shares, paying an average price of $30.41 per share. That was a quarter-million-dollar stock purchase, and it’s already profitable.

Fast forward to July 31 through Aug. 2, and filings show that Gelsinger (through trusts that he controls) purchased an additional quarter of a million dollars worth of INTC stock. This time around, the chief executive bought 7,100 Intel shares at an average price of $35.20 per share.

It’s encouraging to see an executive putting his money where his mouth is. How can Gelsinger be so confident, though? Maybe he’s optimistic because the CHIPS and Science Act could provide financial backing to Intel in the coming quarters.

Or perhaps Gelsinger is confident because Intel plans to makes waves in Europe’s semiconductor market with manufacturing plant in Poland. Hoewever, it’s also possible that Gelsinger’s greatest motivator is Intel’s improving bottom-line results and robust sales outlook.

Intel’s CEO Says the ‘Worst Is Behind Us’

After Intel’s dismal first-quarter earnings release, it seemed like the company had nowhere to go but up. As it turned out, the company’s second-quarter 2023 earnings report confirmed this idea.

In Gelsinger’s view, Intel’s Q2 numbers indicated a “turning point for the company.” The chief executive even declared, “It’s nice bouncing off the bottom.”

Granted, Intel’s quarterly report wasn’t perfect. The company’s revenue, which totaled $12.9 billion, declined 15% year over year. On the other hand, this result beat the analysts’ consensus estimate of $12.1 billion.

Turning to the bottom-line results, Intel earned 13 cents per share in the second quarter. Remember, the first quarter was horrendous as Intel had posted negative income. Moreover, Wall Street had expected Intel to report an earnings loss of 4 cents per share in Q2.

In other words, Intel surprised analysts by returning to profitability. For the current quarter, Intel forecasts revenue of “approximately $12.9 billion to $13.9 billion.” The the midpoint of that range, $13.4 billion, is higher than Wall Street’s consensus estimate of $13.2 billion. Hence, maybe Gelsinger is right and the worst is over for Intel.

CEO’s INTC Stock Purchases Are a Good Sign

Gelsinger didn’t panic when Intel fell out of favor on Wall Street. Instead, he bought shares of his own company, and then recently doubled down on that bet. That’s a positive sign, and I believe it bodes well for Intel.

Going forward, Intel needs to show some follow-through with strong third-quarter sales. The company’s optimistic guidance suggests that this is achievable. Consequently, I recommend buying INTC stock today for a buy-and-hold position.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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