The Intel (INTC) stock price has been one of the worst-performing technology companies in the United States. After peaking at $62.23 in April 2021, the stock has dropped by almost 69% and is hovering at its lowest point since June 2014. This means that $10,000 invested in the company at its peak is now worth less than $3,200.
A series of significant events
Intel, a company that dominated the semiconductor industry for decades, is under intense pressure after a series of unfortunate events.
It has fallen so deep that its market cap of over $84 billion makes it the 15th biggest company in the semiconductor industry. It has become a smaller firm like other brands like Lam Research, Analog Devices, Micron, Applied Materials, and Arm Holdings.
Intel’s fall from grace has happened over a long time. A good example is when the company rejected Steve Jobs’ request to build semiconductors for its mobile devices. Apple moved on to Qualcomm, a company whose market cap of over $186 billion is over twice that of Intel.
The company also made a series of acquisitions that turned out to be big disappointments. After missing out the mobile revolution, Intel started focusing on the automotive sector that has also been going through major changes.
It spent $15 billion to acquire Mobileye, an Israeli company, which it separated with in 2023. Today, Mobileye has a market cap of less than $9 billion.
Intel also acquired Altera, a company in the field-programmable gate array (FPGA) industry. It allows customers to buy integrated circuits and then configure them after manufacturing. It acquired it for over $16.4 billion and the company now hopes to spin it as an independent publicly traded company.
Intel lost big customers
Intel has also lost some of the biggest companies in the tech industry as clients in its CPU industry. It lost Apple, which is now using its own semiconductors to power its products.
Analysts believe that Apple M3 and its other lineups are better than the products that Intel is making. Its chips don’t require fans and are more energy efficient. Microsoft and Amazon are also building their own semiconductors.
At the same time, Intel’s CPUs have continued to lose market share from AMD while its GPUs are significantly behind those made by Nvidia and AMD.
Intel’s other misstep is its goal to become a one-stop shop in the semiconductor industry by building fabrication centers in the US, Israel, and Germany. Its goal is to become a bigger competitor to Taiwan Semiconductor, a company that manufactures chips for the likes of AMD and Nvidia.
While Intel is using public money to do this, I believe that it faces an uphill battle in this sector. Besides, it has not yet received a major customer to manufacture these chips, meaning that these locations will be used to make Intel’s own chips. It is unclear whether competitors like Nvidia and AMD will be comfortable using Intel as their supplier.
Intel’s turnaround to take time
Intel is now working on a turnaround after it published weak financial results. These results showed that its revenue dropped by 1% to $12.8 billion in the last quarter while its gross margin fell to 38.7%.
Intel also lowered its forward guidance to between $12.5 billion and $13.5 billion, down by $1.25 billion from the same period in 2023. Its gross margin will also drop to 38% while its loss per share will rise to $0.03.
Now, the management is working on a turnaround strategy that it hopes will lead to better shareholder returns in the future. It is laying off over 15,000 workers and working on taking Altera public either this year or in 2025. Its cost cuts are expected to save over $10 billion in costs.
However, I believe that the company’s turnaround strategy will take time. I also suspect that a turnaround needs someone else at the top to make these decisions. For example, General Electric turned around when Lawrence Culp took over.
Similarly, Rolls-Royce Group turned around when Tufan Erginbilgcic took over in 2023 while Chipotle took off when Brian Niccol became CEO.
Intel stock price analysis
Turning to the daily chart, we see that the INTC share price peaked at $50.53 in December last year. Most recently, it formed a big down-gap when it published weak financial results in August.
As it crashed, the company moved below the key support level at $23.32, its lowest swing in October 2022. It has also formed a death cross pattern as the 200-day and 50-day moving averages crossed each other.
The stock’s MACD and the Relative Strength Index (RSI) have tilted upwards. Therefore, the stock will likely continue falling as sellers target the next key support level at $15.
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