From the moment when the bullet grazed Trump, it was almost certain that he would win the 2024 US presidential election. Musk even compared Trump to one of the greatest presidents in American history, Theodore Roosevelt, praising his unyielding spirit as a new generation of American leaders. After the shooting incident, Trump's lead support rate quickly rose, leading Biden by a large margin. With the title of "understanding king", Trump has rekindled the "MAGA wind" in recent days, and these top institutions have embraced the stocks that are expected to benefit from the "understanding king" policy with real money. Among them, Intel (INTC.US), a veteran chip giant that pioneered the x86 architecture and attached with the AI tag, walked out of a unique rebound scenery when the chip stocks fell across the board.

According to Polymarket, a US 2024 election prediction platform, Trump's probability of winning in the November election soared more than 10 percentage points after the shooting incident, reaching an astonishing 75%, and is currently hovering around 63%. In contrast, Biden's chances of winning have plummeted, currently only around 5%, and Vice President Harris's support rate has risen to around 20%, but he still cannot be compared with Trump.

Financial market investors generally believe that the attack on Trump will be one of the most important turning points in the US election, which will fully enhance Trump's political leadership image and lay the foundation for him to return to the White House in November. Especially in the minds of those who support Trump, he is regarded as one of the historic heroes who unite American voters. Even in the eyes of some Republican supporters who do not support Trump, Trump survived the bullet under God's favor, which means that he is the only next president. In contrast, the weaknesses of the opponent from the Democratic Party, the current president Biden, are more pronounced in terms of on-site response, speech logic, and party support rate.

On Wall Street, the "Trump trade" has been popularized in global markets since Biden's poor performance in last month's presidential debate boosted Trump's prospects for victory. The coverage of the "Trump trade" is very wide, and traders and strategists generally agree that under the MAGA policy tone, Trump’s election will stimulate inflation portfolio trades that benefit from loose fiscal policies and greater trade protectionism- that is, betting on the strong US dollar, rising US bond yields, while domestic industrial giants benefit, and banks, medical care, and energy stocks rise. Without exception, these assets have recently rebounded against the trend of the "Trump trade".

MAGA is the English abbreviation for "Make America Great Again". It can be used to refer to the policy tone of the entire Trump administration, and some mainstream media use it to refer to Trump himself and American voters who fanatically support Trump. The term "Trump economics" created by the media is equivalent to low interest rates and low taxes. The goal is to "make America great again" through a loose fiscal plan dominated by low interest rates and tax cuts.

The MAGA wind is sweeping Wall Street, and Intel is the most core "understanding king concept stock".

Intel may be the biggest winner of the new round of "AI investment frenzy". Trump's victory has become the basic consensus of most investors. From the latest news, Trump, who has the title of "understanding king", may be more fierce in trade protectionist policies than when he took office in 2016 and during the Biden administration.

In the eyes of some analysts, what investors can imagine is that the "understanding king" who pursues trade protectionist policies and is eager to see high-end manufacturing return to the United States is successfully returning to the White House in November. The future subsidy support for Intel may continue to be upgraded, and even does not rule out the use of policy forces to force TSMC to transfer some core chip orders to Intel or TSMC's chip factory that is about to be built in the United States, driving the prosperity and growth of the US chip manufacturing industry.

In a recent speech, Trump frequently emphasized the importance of the trend of "manufacturing returning to the United States". In his view, TSMC, which has the title of "chip foundry king", seized the prosperity that originally belonged to American chip manufacturers. Trump said that almost all chip manufacturing in the United States was snatched by TSMC and did not receive any benefits. In his remarks, we can see that Trump is striving to open up stricter trade protectionism policies after taking office, especially hoping that the two major American domestic chip giants, Intel and GlobalFoundries, can seize TSMC's huge chip orders.

After Trump's comments on chip manufacturing and trade protection were announced, the U.S. chip stocks plummeted across the board. After all, most chip giants rely on TSMC's capacity. Trump's comments undoubtedly dealt a heavy blow to TSMC's prospects, making it impossible for TSMC to boost its sluggish stock price even if its performance exceeds expectations. Chip giants such as Nvidia and AMD that rely on TSMC also face an uncertain outlook for production capacity.

Although the logic of the sell-off in chip stocks is due to ASML's Q3 performance outlook falling short of expectations and the expected interest rate cut pushing a style switch in the U.S. stock market, the market pricing since Wednesday clearly shows that the market believes that Trump's comments are more damaging. Wall Street has begun to price in Intel as a major winner after 'the understanding king' takes office. Looking at the trend of chip stocks since Wednesday, the Philadelphia Semiconductor Index (. SOX), known as the 'global chip stock barometer', has plunged by 7% in two days, while Intel's stock price, which has been sluggish since the beginning of the year, has rebounded by nearly 15% since July, and the Philadelphia Semiconductor Index has fallen more than 2%.

Both Intel and GFS.US are domestic chip makers in the United States, but unlike Intel, which focuses on 10nm and below high-end processes, GFS focuses on mature processes. However, GFS's stock price has also risen against the trend recently, especially when the U.S. chip stocks plummeted across the board on Wednesday, GFS rose nearly 7% against the trend.

The strong upward trend in Intel's recent stock price has attracted more and more attention from investment institutions. In the eyes of these institutions, Intel's stock price has quietly embarked on the 'long bull road' from the moment when Trump was shot, and can be regarded as the most promising 'understanding king' concept stock. Northland Securities recently released a research report stating that it maintains a 'buy' rating on Intel and a target price of $68 within 12 months (Intel closed at $34.87 on Thursday).

Global Equities Research is more aggressive, bullish on Intel rising to $100 in the long term. Global Equities said that high subsidies from the US government will fully help Intel achieve its ambition as a leader in high-end chip manufacturing, and then help Intel become a global leader in the manufacture of 'next-generation AI chips' in the future. Global Equities said that because Intel has the most advanced chip process technology routes such as 18A, 14A, and 10A, it is crucial for future mass production plans of AI chips with higher performance such as Nvidia and AMD.

Intel's ambition: AI PC and chip manufacturing dream

From the perspective of performance expectations, occupying the core leadership position in the AI PC field that is expected to lead a new wave of consumer electronics replacement, as well as Intel's 'chip manufacturing dream' in the high-end chip manufacturing field, may be important catalysts for promoting Intel's long-term performance expansion trend and bullish stock price trend.

Melius Research, a well-known investment institution on Wall Street, recently released a report stating that the stock price rise of 'latecomers' in the AI field, such as Intel, AMD, IBM, and even Apple, is likely to begin to catch up with absolute leaders in the field of artificial intelligence such as Nvidia, Microsoft, and Google in the second half of this year, leading a new wave of 'AI investment frenzy'.

Here, 'latecomers' does not refer to their relative backwardness in AI underlying technology, but refers to the relatively late time of their deployment layout in a specific field, the far lower market share compared to industry leaders, or lagging stock price rises behind the leaders. For instance, although Intel has no share in the data center AI chip market, it may boost its valuation by participating in the AI PC layout relying on the x86 ecosystem advantage and entering the chip manufacturing industry.

Melius pointed out in the research report that AMD and Intel are expected to benefit from the AI PC wave, as the two x86 architecture chip giants integrate CPU+NPU+GPU processor hardware for new AI PC terminal devices that run the Microsoft Windows OS. At the same time, Microsoft is about to launch the "Recall" function in its "Copilot+ PC," which Melius believes may be the closest upgrade reason to the killer application.

In Melius' view, AI PC may be an important catalyst for Intel's stock price to continue to rise. Intel has been deepening its development of x86 architecture CPUs in the PC field for decades, and has already had a strong developer ecosystem, supply chain cooperation system, and a huge loyal user group in the PC field.

Since this year, the two major x86 architecture CPU giants, AMD and Intel, have been stepping up their efforts to layout AI PCs, and Qualcomm has also entered the AI PC field in a big way by launching a high-performance central processing based on ARM architecture Unit to accelerate AI reasoning tasks. At this year's Computex conference, AMD CEO Dr. Su invited a series of partners to the stage-from Enrique Llores, CEO of HP, to Jonney Shih, chairman of Asus-to discuss the use of AMD's new Ryzen AI 300 series processors on their upcoming AI PCs, and these PC vendors also said this year that they will configure Intel's new processors AI tailored for AI on the CPU.

The brand-new Core Ultra processor introduced by Intel integrates the AI dedicated neural processing unit (NPU) and Arc GPU into the CPU. The NPU is specially designed for accelerating AI inference tasks. This integrated CPU + NPU + GPU central processor is designed as the "most efficient processor" of the company, marking the official arrival of the AI PC era. The Lunar Lake processor aimed at notebook computers is scheduled to be released in the second half of 2024. This chip has a "brand-new low-power architecture and significant IPC improvement," and the AI data processing performance of the GPU and NPU modules is three times higher than that of Meteor Lake.

According to the latest forecast data from Canalys research firm, 2024 can be called the "first year of AI PCs." It is expected that the global AI PC shipment in 2024 will reach 51 million units, accounting for 19% of the total PC shipment. But this is only the beginning of the market transformation. It is estimated that by 2028, the AI PC shipment will reach 208 million units, accounting for more than 70% of the total PC shipment market share. The compound annual growth rate (CAGR) between 2024 and 2028 is expected to reach an astonishing 42%.

In terms of advanced process chip manufacturing for Intel's transformation to a 'global chip manufacturing plant', Intel expects that the overall operating loss of its chip manufacturing plant will peak in 2024. Intel plans to achieve up to 40% gross margin under Non-GAAP standards and 30% operating margin under Non-GAAP standards from now until some time in 2030. Intel CEO Gelsinger recently said that he is willing to manufacture chips for any company, including long-term competitors such as Nvidia and AMD. Gelsinger predicts that by 2030, Intel will mainly satisfy the huge demand for AI chips to make its chip manufacturing business the world's second largest one, and its scale may be only slightly inferior to the chip manufacturing king TSMC.

Gelsinger also said that the company's business transformation is proceeding smoothly, and it will achieve cost parity with its chip manufacturing competitors in the 18A production process, which will make Intel more competitive. '18A' and other chip manufacturing categories not only refer to Intel's planned 1.8nm-level chips, but also to Intel's planned 3D chiplet advanced packaging process roadmap.

Intel's chip foundry business with room for imagination is also the core logic of investment institution Global Equities Research's bullish prediction that Intel will rise to $100. "The $8.5 billion in free government funding is a very optimistic start. But in addition, Intel has plans for a chip manufacturing company that can produce higher performance 'next-generation' AI chips based on 18A, 14A, and 10A process technologies. The advanced 3D packaging of Intel's high-end chips is also the necessary technology to drive the accelerated development of AI technology," Global Equities said in a report.

In addition to Intel's 1.8nm chip foundry being expected to lead its competitors, Intel's Foveros advanced packaging technology, which leads Taiwan Semiconductor and Samsung, is also the core logic of Global Equities' bullish prediction that Intel will win more orders in the AI chip foundry field. From a technological perspective, Foveros is superior to TSMC's 2.5D CoWoS technology. The 3D advanced packaging technology named Foveros is a pioneering chip stacking solution, and it is expected that AI chips will be the largest-scale application of this technology; Intel's technology enables the computation block of the processor to be vertically stacked rather than horizontally stacked. Intel said that its production capacity for 3D Foveros packaging is expected to be four times the current level by 2025.

The current demand for AI chips is extremely strong, and it may be so for a long time to come. During an earnings conference on Thursday, Taiwan Semiconductor's management said that CoWoS advanced packaging required for AI chips is expected to be in short supply until 2025, and may only slightly ease in 2026. At the "Advancing AI" conference, AMD, Nvidia's strongest competitor, raised its global AI chip market forecast for the period ending 2027 from the previous $150 billion to $400 billion, with AI market forecast for 2023 expected to be only about $30 billion. The well-known investment firm I/O Fund expects the total potential market size of the global AI data center market to reach $400 billion by 2027, and is expected to reach an astonishing $1 trillion by 2030.

The prosperity cycle is still going on! The frenzy of chip stocks may not be over yet.

Although the financial market has begun to see Intel as the concept stock with the greatest potential for growth, Intel, which focuses on PC chips, is essentially a very pure chip stock, and its bullish expectations behind its stock price also rely on the strong support provided by the upswing in the chip industry prosperity cycle.

The wave of chip industry recovery led by AI chips is becoming more and more clear. The data released by the Semiconductor Industry Association (SIA) of the United States shows that in May 2024, the global semiconductor sales totalled US$49.1 billion, an increase of 19.3% over the same period last year and an increase of 4.1% from the previous month. With regard to the sales expectations of the semiconductor industry in 2024, SIA President and CEO John Neuffer expected overall sales to increase by double digits compared to 2023.

When the scale of AI chip deployment in servers, which handle massive parallel computing, reaches the basic computational needs and basic performance support, AI large models will inevitably be integrated into these terminals, including consumer electronics such as smartphones, humanoid robots, and application terminals such as electric vehicle software systems and industrial production. Taiwan Semiconductor's management emphasized on Thursday that almost all of its chip foundry customers want to incorporate AI large models at the end.

Compared with cloud-based AI, edge AI with significant advantages such as high efficiency, high speed response, and personalization is more in line with the actual needs of consumers. According to the technology roadmap of chip manufacturers, AI chips in application terminals such as PCs, smartphones, and smartwatches will be centered around the CPU, integrating NPU and GPU technologies. This means that the demand for chipset upgrades in consumer electronics, including central processing units, storage chips, MCUs that cover electric vehicle software systems and analog chips that cover industrial fields, will soon usher in a surge period since 2024 driven by AI chip demand. According to Allied Market Research, from the perspective of chip types, application terminal AI chips with CPU as the core will occupy a majority share of the global AI chip market.

Therefore, as the large models of edge AI converge with everything, it means that the demand for updates and upgrades of CPUs, storage chips, MCUs that cover electric vehicles, and analog chips that cover the industrial field, which are centered around CPUs in PCs, smartphones, smartwatches, and humanoid robots, will also experience a surge in demand since 2024. Nomura, a top global financial institution, recently released a report stating that as the cyclical technology recovery expands to other consumer electronics terminal markets, the entire chip industry will enter the next cycle of prosperity, which is expected to continue until 2025. Nomura expects global chip sales to show strong growth in the coming months, and the cyclical recovery in the terminal chip market driven by AI chip demand will expand from AI servers to traditional servers, PCs, and smartphones' core CPU chips as well as major computing areas, such as electric vehicle MCUs.

Top global financial institution Nomura recently released a report that, as the cyclical technology recovery expands to other consumer electronics terminal markets, it will support the entire chip industry to enter the next cycle of prosperity, which is expected to continue until 2025. Nomura expects global chip sales to show strong growth in the coming months, and the cyclical recovery in the terminal chip market driven by AI chip demand will expand from AI servers to traditional servers, PC, and smartphone core CPU chips as well as major computing areas, such as electric vehicle MCUs.

Bank of America, one of the top Wall Street banks, released research reports stating that the current semiconductor industry recovery cycle began at the end of 2023 and is currently only in the third quarter, which means that a strong recovery trend may continue until the middle of 2026. Analysts at Bank of America pointed out that after experiencing an extremely sluggish downward cycle, the semiconductor industry typically enters an upswing cycle of up to 10 quarters, and this pattern is just beginning.

The latest semiconductor industry outlook data released by the World Semiconductor Trade Statistics Organization (WSTS) shows that the global semiconductor market is expected to show a very strong recovery trend in 2024, and WSTS expects a significant increase in the sales scale of the global semiconductor market for 2024 compared to the forecast report at the end of 2023. For 2024, WSTS predicts a market size of $611 billion, which means a significant increase of 16% compared to the previous year, and a significant upward revision from the forecast at the end of 2023.

WSTS states that the expected revision for 2024 reflects the strong performance of the past two quarters, especially in the computing terminal market. After a significant market contraction in 2023, WSTS expects that in 2024, there will be two core chip product categories that will drive sales growth by double digits, with the total sales of logic chips including CPU and GPU increasing by 10.7%, and the storage chip category dominated by DRAM and NAND, which best reflects the semiconductor cycle, expected to surge by 76.8% in 2024.

Looking ahead to 2025, WSTS predicts that the global semiconductor market sales are expected to reach $687 billion, which means that the global semiconductor market is expected to grow by about 12.5% on top of the already strong recovery trend in 2024. WSTS still expects that this growth will be mainly driven by the storage chip category and logic chips, with the overall scale of these two categories expected to skyrocket to more than $200 billion in 2025, driven by the AI boom.