- Intel stock plunges 61% YTD, ranking as the worst performer on the Dow and Nasdaq 100.
- Disappointing Q2 results and weak Q3 outlook raise concerns about the chipmaker’s future.
- Will Intel’s transformation plan help it bounce back?
Intel Stock Plummets 61% Year-to-Date: Can It Recover?
The renowned semiconductor chip maker Intel (NASDAQ:) has faced a tumultuous year, with its stock price plummeting by a staggering 61% so far in 2024, earning it the title of the worst-performing stock on both the Dow and Nasdaq 100.
Despite its historical dominance in CPU chip production for PCs and laptops, Intel has lost ground to competitors like AMD (NASDAQ:) in the CPU market and NVIDIA (NASDAQ:) in the AI chip market for data centers.
Starting the year at $50 per share, Intel’s stock now hovers around $19.60 as of August 28, marking its lowest price in over a decade. The big question now is whether it’s a good time to invest in Intel.
A Challenging Quarter
Intel’s stock decline accelerated following its Q2 earnings release on August 1. The company reported a 1% drop in revenue to $12.8 billion, falling short of analysts’ expectations of $12.9 billion.
Earnings took an even bigger hit, with a net loss of $1.6 billion, or -38 cents per share, compared to a net income of $1.5 billion, or 35 cents per share, in the same quarter last year. Adjusted earnings plummeted to 2 cents per share, significantly below the estimated 10 cents per share.
The high expenses, driven by increased research and development costs for new AI PC chips, further weighed down Intel’s earnings.
Moreover, the company’s Q3 outlook was bleaker than anticipated, with projected revenue of $12.5 billion to $13.5 billion, a decline from the previous year. The gross margin is expected to drop to 34.5%, and adjusted earnings per share are forecasted to be in the negative territory.
Intel’s CEO, Pat Gelsinger, expressed disappointment in the Q2 performance and acknowledged the challenges ahead.
To address these issues, Intel announced a transformation plan aimed at reducing costs by $10 billion by 2025 and focusing on strategic investments in its foundry business.
Should You Buy Intel Stock?
While Intel’s near-term outlook appears uncertain, its long-term transformation initiatives could yield positive results, especially with favorable market conditions and potential government support.
Analysts have set a median price target of $27 per share for Intel, implying a 27% increase in the next year. However, concerns about its high valuation persist, given the projected slow earnings growth.
While caution is advised due to ongoing challenges, Intel’s strategic moves and potential upside make it a stock to watch closely for future developments.