For Intel’s Stock, It’s Been ‘One Disaster After Another’

Intel’s (INTC) stock, once a tech darling, has fallen on hard times.

And while recent reports of possible strategic changes and deal activity have hinted at a path to a rebound for the chipmaker’s stock—Wall Street is broadly optimistic that it will rise again—analysts admit that’s far from certain.

“Intel right now is just a series of one disaster after another,” Bernstein analysts wrote in a note Thursday.

From Top Chip Stock To Possible Dow Delisting?

Intel was until a few years ago the most valuable chipmaker by market capitalization—before artificial intelligence (AI) darling Nvidia (NVDA) overtook it to claim that title in 2020.

And the time since hasn’t been kind to Intel, with shares accelerating their decline in recent months amid concerns about its ability to engineer a turnaround after reporting wider-than-expected losses and announcing massive layoffs. 

The stock has lost about about a third of its value since Intel reported its latest earnings in August, and nearly two-thirds since the start of 2024. That makes it it one of the worst-performing S&P 500 stocks of the year; Even aircraft maker Boeing (BA), rocked by safety concerns after a series of incidents tied to faulty parts, has fared better. The recent slump price has fueled speculation that Intel could lose its place in the blue-chip Dow Jones Industrial Average.

The chipmaker is reportedly considering selling parts of its business to stem losses. Analysts warn Intel’s issues could get worse before they get better. 

‘No Quick or Easy Fix’ for Intel

Intel, once the largest chipmaker by revenue in the U.S., has lost market share as much of its business remains tied up in legacy PC products and it struggles to compete with leading AI chip designers with its most advanced chips, missing growth opportunities from the AI-driven boom in demand that’s boosted Nvidia and Advanced Micro Devices (AMD).

CEO Pat Gelsinger, who took the helm of Intel in 2021, told investors earlier this year that the company is working to “close the technology gap created by over a decade of underinvestment.”

But Bank of America analysts told clients last month they see “no quick or easy fix.” Intel, they said, is “just not equipped to simultaneously compete against focused and agile fabless (NVDA, AMD) and foundry (TSMC) rivals.”

For Intel, Anything Goes

The company is reportedly considering a range of options to cut costs and streamline its operations, including spinning off or selling its foundry business, selling its Altera programmable chip unit, and trimming its stakes in companies like MobileEye (MBLY) after cutting its stake in chip designer Arm (ARM). 

Those moves could simplify the organization and raise capital. But they could also hamper its efforts to catch up, let alone get ahead, analysts said. Jefferies analysts warned last week there could be an even greater crisis ahead for the chipmaker if it misses on key parts of its plans to ramp up manufacturing capabilities amid reports of setbacks. 

Intel’s issues could also threaten its ability to benefit from a nearly $20 billion package of CHIPS Act incentives contingent on the chipmaker’s ability to meet certain milestones and other requirements. Intel has not received any CHIPS Act funds yet, with officials reportedly seeking more information on its manufacturing roadmap.

Intel did not respond to Investopedia’s request for comment. Investors could get more updates in the weeks to come, with Gelsinger and other senior executives reportedly holding a series of meetings this week to discuss plans to turn the company’s fortunes around.

Should Investors Buy or Sell? Most Analysts Say ‘Hold’

Nearly all of the 19 analysts covering Intel and tracked by Visible Alpha had “hold” ratings on the stock as of Thursday. Three had a “sell” rating, while just one gave it a “buy.” 

Still, their consensus price target of $26.34 would represent about 36% upside from Thursday’s closing price of $19.36. 

Bernstein analysts on Thursday said their top sector picks remain Nvidia and Broadcom (AVGO). “We would stay far away,” they wrote. “It feels like there are easier ways to make money.”