The Intel stock price has imploded as concerns about the fallen angel continue. INTC shares have dropped to $20.8, its lowest level since September, and 60% below the highest point this month.
Intel has continued to underperform other semiconductor companies like AMD, NVIDIA, and Qualcomm. On the other hand, the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) have risen by 48% and 21%, respectively, this year.
Intel has become a big fallen angel
Intel, a company that led the semiconductor industry for decades, has become a fallen angel. Its market cap of about $89 billion is much smaller than that of many chip companies it inspired.
For example, Qualcomm is now twice the size of Intel because of its $180 billion market cap. Intel is also much smaller than other top companies like Applied Materials, Texas Instruments, and Analog Devices.
This is a big fall from grace for a company that introduced most of the concepts in the semiconductor industry today. For example, Gordon Moore, one of its co-founders, introduced the concept of Moore’s Law, which explains why the number of transistors in an integrated circuit doubles every two years.
Intel has been forced to go through a tough turnaround strategy that will see over 15,000 employees leave the company. 7,000 of these workers took an early retirement package. Pat Gelsinger, the CEO, has already left the company. He has called for his X followers to fast and pray for Intel and its workers.
Every Thursday I do a 24 hour prayer and fasting day . This week I’d invite you to join me in praying and fasting for the 100K Intel employees as they navigate this difficult period. Intel and its team is of seminal importance to the future of the industry and US.
Intel is now being overseen by David Zinsner and MJ Holthaus, the CFO and chief of products.
Intel faces a difficult future ahead
The reality is that Intel faces a difficult future ahead because of the rising competition from the likes of AMD and NVIDIA.
AMD has become a major competitor in the CPU industry, while NVIDIA is the market leader in the GPU industry. While Intel has launched its own GPUs, most customers are opting for those made by NVIDIA and AMD, which has gained a 10% market share in the industry.
The most recent data showed that the company’s revenue dropped by 6% to $13.3 billion as demand for its products waned. In contrast, NVIDIA’s revenue surged by over 80% to over $35 billion in the same period.
Intel’s margins have dropped, with the gross margin falling by 27.5 basis points to 15%. The company made a big loss, which it attributed to restructuring costs, as it seeks to save about $10 billion in costs.
Intel also issued another weak forward guidance. It expects that its quarterly revenues will be between $13.3 billion and $14.3 billion, down by about $1.6 billion from the same period last year.
Intel also sees its gross margin falling by 9.3% to 39.5%, and its earnings per share falling to 12 cents.
Intel hopes that its ongoing turnaround strategy will pay off. It has decided to change its business by making its foundry business a subsidiary, a move that will enable it to have access to external funding.
Intel’s hope to become a big player in the foundry business is one of the reasons why it has underperformed the market over time. It has spent over $50 billion building its fabs in the US, Israel, and Germany.
Most of the top successful chip companies like AMD and NVIDIA focus on design and then let fabricators like GlobalFoundries and Taiwan Semiconductor do the hard work. A good example of this is AMD, which spun its foundry business to what is now GlobalFoundries.
Read more: Intel stock price forecast: don’t buy when there’s blood in the street
Intel stock price analysis
The weekly chart shows that the INTC stock price has been in a strong downward trend since 2021 when it peaked at $62.25. Its attempts to rebound have always found a major roadblock, with the most recent one being at $50, the highest level on December 26.
Intel stock has remained below the key support at $23.5, its lowest level in October 2022. It has also moved below the 50-week and 100-week Exponential Moving Averages (EMA).
Therefore, the Intel share price will likely continue falling as sellers target the next key psychological level at $15. While Intel’s stock will rebound, this recovery will take time as the turnaround continues.
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