<p>Joan Cros / NurPhoto / Getty Images</p>

Joan Cros / NurPhoto / Getty Images

Key Takeaways

  • Intel and Advanced Micro Devices (AMD) could rise as part of a second-half “catch-up,” Melius Research said. The companies, alongside Apple and IBM, were among the analysts’ “AI Laggards” in the first six months of 2024.

  • The analysts noted a pattern in 2023 where “underdogs” underperformed 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 could benefit from Microsoft’s Copilot+ PCs, while Apple could benefit from an iPhone 16 upgrade cycle and IBM is positioned to gain from infrastructure software strength.

Intel (INTC) and Advanced Micro Devices (AMD) could gain in the second half of the year, according to Melius Research, which referred to the companies as “AI Laggards” for the start of the year.

Intel shares were up more than 5% in Monday afternoon trading, narrowing their more than 30% year-to-date loss. AMD shares were up 3%, with the stock gaining 20% since the start of 2024. While the chipmaker has gained more than the S&P 500 index’s nearly 17% gain year-to-date, it significantly lags Nvidia (NVDA), which has more than doubled in the same period.

Could Second Half of 2024 Mirror 2023?

Melius analysts noted that the “AI winners” of the first half of 2023 experienced a pause in the last six months of 2023, while first-half “underdogs” gained.

They cited the VanEck Semiconductor ETF (SMH), which gained 50% in the first half of 2023, but rose only 15% in the second half of 2023. Meanwhile, they said, companies including Intel and Dell saw their shares perform well in the second half of last year.

The second half of 2024 could bring a similar pattern, Melius analysts said.

AMD, Intel, Apple, IBM Could ‘Catch Up’ in Second Half

“We are believers in a ‘catch-up’ trade for some in semis, hardware and even software” as big tech’s increased spending on artificial intelligence (AI) investments could be less of a catalyst in the second half of the year, Melius analysts wrote.

They called out AMD, Intel, Apple (AAPL), and International Business Machines (IBM), specifically as first-half underperformers that could benefit from the “catch-up.”

Melius analysts said that AMD and Intel could benefit from their chips being in Microsoft devices, as the company is set to launch its “Recall” feature in its Copilot+ PCs, which could be “the closest thing to a ‘killer app’ reason to upgrade.”

Apple is set for an AI-supercharged iPhone 16 upgrade cycle, the analysts said. Apple unveiled iOS 18 with Apple Intelligence and an AI partnership with OpenAI at its developers’ conference in June.

The analysts said infrastructure software could be well-positioned to gain, naming IBM in that area specifically.

Apple and IBM shares were creeping higher Monday afternoon, up almost 18% and 8%, respectively, year-to-date.

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