We're buying more of Jim Cramer's new favorite chip stock on the dip

Jim Cramer's Charitable Trust plans to buy ~100 more Intel shares at about $106, raising its INTC weighting to ~2.75% from ~2.5%. Intel will invest about $5.7B in its Ireland plant to expand Xeon server (and other) production, aligning with the article’s key point that AI chip demand continues to exceed supply. The push is reinforced by TSMC’s reportedly strong June sales (+~68% YoY), with Intel shares noted as extending a recent selloff despite the favorable demand/supply backdrop.

Analysis

The cleanest expression here is not Intel, but the upstream bottleneck: TSM has the best claim on incremental AI economics because scarcity supports pricing power, utilization, and mix. If the market is still discounting a 12-18 month growth runway, any confirmation from the upcoming print can keep fabs and advanced packaging names bid even if semis overall wobble.

Intel’s capital spend reads more like defensive maintenance than a near-term earnings catalyst. In the next 1-3 quarters, the risk is that higher capex and working capital pressure free cash flow before any meaningful share gain shows up; that makes the stock vulnerable if management cannot convert this into visible server-socket or foundry wins. Alphabet is a quieter beneficiary: better access to server silicon and custom infrastructure can lower cloud unit costs, but the upside is more margin protection than headline revenue acceleration.

The consensus may be overestimating how quickly extra capacity translates into investor-friendly returns. If AI demand remains tight, suppliers keep the economics; if demand normalizes, Intel’s spend is left hanging and TSM multiple support can fade fast. What would falsify the bullish supply-scarcity thesis is any sign of order digestion, weaker TSM commentary, or evidence that cloud customers are pushing out capex and substituting toward cheaper custom silicon.

Key Decisions for Investors

• Long TSM on any post-event dip; 1-3 month horizon, because it is the most direct beneficiary of sustained AI supply tightness. Risk/reward improves if the stock consolidates while forward sales estimates still rise.
• Pair trade: long TSM / short INTC, sized market-neutral for 3-6 months. The spread should work if AI scarcity persists and Intel’s capex remains a drag before revenue inflects; cover if INTC shows tangible foundry/customer share wins.
• Add GOOGL on weakness as a quiet beneficiary of better compute availability and custom infrastructure economics. This is a 6-12 month margin story rather than a near-term multiple rerate; invalidate on cloud margin compression or weaker capex discipline.
• Set alert on Intel guidance and TSM commentary this week. If Intel does not show a credible path to operating leverage, treat the stock as a sell-the-rally candidate rather than a thesis buy.