Legacy Tech Stocks Still A Safe Bet Despite AI Fever

AI fever has gripped Wall Street, with Nvidia recently surging to become the most valuable company in the world. If you want to get in on the AI hype, you have plenty of stocks to choose from. But that doesn’t mean that the tried-and-true tech stocks of the past half-century should be dismissed. Here’s what’s happening with two of the best known.

Intel

Intel is down this year, with a 40% drop in share prices since January. It also posted a net loss of more than $400 million in the first quarter. But analysts don’t believe this will be a long term trend. Intel is a solid and mature company that’s also a household name in computer chips, and the U.S. desperately needs more domestically produced chips. Our tech companies are still heavily dependent on chips from overseas, but a massive government investment has started to turn that around. Meanwhile, Intel has embarked on a two-pronged plan to turn its fortunes around by both cutting costs and fully taking advantage of the government investment. It may take some time, but Intel is in a great position to regain its historic growth margins.

Cisco

Cisco’s biggest issue right now seems to be that it’s always been a bit behind-the-scenes. The company is a giant in networking and infrastructure, and it has recently shifted its focus to AI-powered solutions for businesses. The problem is that the company simply isn’t yet standing out in the incredibly crowded AI field. Cisco just hit a 52-week low, and it may take a while for things to turn around. Yet for patient investors, it could be a smart contrarian buy. As long as interest rates remain high, a lot of companies have to make careful choices about where to spend money. Upgrading IT infrastructure simply may not be a current priority. As the spending climate improves, though, Cisco will be well poised to meet increasing demand.

Lisa Fritscher has no positions in the companies mentioned. Stocks.News has positions in Intel.