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What you need to know
- Investors in Intel's stock haven't had much to celebrate in 2024, with the shares losing more than half their value. It could also be a challenging year for next.
- Analysts believe that Intel’s new turnaround plan and the hiring of a CEO could have a positive impact on the company in the near future. However, it could be a long time before the issues are resolved.
- As Intel searches for a new CEO, the company's path forward is likely to evolve.
Investors in Intel’s (INTC) stock haven’t had much to celebrate in 2024, with the shares losing more than half their value. Next year could be challenging too.
Analysts have suggested that the appointment of a new CEO and changes to Intel’s turnaround plans could be near-term catalysts for the stock. But they also say that the business challenges facing the storied chipmaker could take months—or years—to work through.
“The situation here seems likely to keep getting worse before it gets better,” Bernstein analysts wrote after the departure of former CEO Pat Gelsinger earlier this month.
Intel is searching for a new chief executive officer. The company’s direction will likely change. Gelsinger had advocated keeping Intel’s contract foundry and manufacturing businesses in his efforts to turn the company around. Analysts suggest that the breakup of its business operations may be more probable. Intel’s stock rose a little bit earlier in the year on rumors to this effect.
In a presentation to investors last week, interim co-CEOs Dave Zinsner and Michelle Johnston Holthaus called the possibility of a full separation of Intel's foundry business an “open question for another day,” AlphaSense provided a transcription.
Intel’s shares ended Friday at 19,52 dollars, down by 61% on the year. PHLX Semiconductor (SOX), the index that measures semiconductors, is expected to increase by 19% between 2024 and 2025. Nvidia (NVDA), a company which replaced Intel earlier this year in the Dow Jones Index, has also more than doubled its value.
Wall Street is broadly cautious about Intel's stock, with 13 of the 16 analysts tracked by Visible Alpha sitting on "hold" ratings and three with "sells." But there’s still optimism. Their current consensus price is around $24, which represents roughly a 23% premium over recent prices.
Bank of America’s analysts stated earlier in the month that it was more probable for a separation to occur. However, analysts also stated that Intel’s turnaround would still depend in part on its foundry operations, as they are set to get billions of USD from CHIPS Act funds, tied to meeting certain manufacturing milestones.
While a breakup could benefit shareholders in the short term, Wedbush analysts wrote recently, it would fail to resolve Intel’s larger issues in proving its competitiveness, citing the company's "lagging position" in both chip design and production.
And Bernstein analysts earlier this week advised investors to "stay far away."
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