After suffering its biggest single-day loss in years as April wound to a close, Intel (NASDAQ:INTC) has been crawling out from under a barrage of bad news and trying to change the narrative. Since bottoming out near the start of the month, Intel stock has been steadily regaining ground.
The question is, will that Intel stock price recovery continue when resurgent computer CPU rival Advanced Micro Devices (NASDAQ:AMD) releases its 3rd generation Ryzen processors?
A report published on Friday suggests Intel is preparing to slash prices on its CPUs in an effort to prevent AMD from gaining ground. That could be interpreted as Intel getting aggressive about protecting marketshare, or it could be seen as a sign of desperation. Either way, there are implications if you invest in INTC stock.
Report: Intel to Slash Desktop CPU Prices by Up To 15%
AMD — Intel’s only real rival in the computer processor market — is releasing the third generation of its Ryzen desktop CPUs starting on July 7. For Intel (and those who own Intel stock) that will not be a day to be celebrated.
Intel still dominates the industry, but AMD has been steadily grabbing a bigger chunk of the market since the company introduced Ryzen processors based on its new Zen architecture in 2017. On July 7, the third generation Ryzen desktop CPUs start to roll out, and the early buzz has them outperforming Intel’s best at a significantly lower price.
On Friday, industry publication DigiTimes reported Intel has already told its PC partners that it will be cutting the price of its 8th and 9th generation desktop CPUs by 10-15% in response. Will that move be enough to take the edge off the 3rd Gen AMD Ryzen advantage? The answer will quickly be reflected in the price of INTC stock, especially if those new AMD processors fly off the shelves.
The Challenge Facing Intel Stock
As of Monday, the Intel stock price was at $47.63, after ending May at just over $44 and stringing together a series of small gains.
That doesn’t sound like much. But coming off an April that roiled investors — INTC stock hit highs not seen since 2000 then suffered it’s biggest single-day drop in years — steady gains have been a welcome change of pace.
Intel has suffered through a series of bad news stories since April, including the escalating trade war with China, the announcement of AMD’s 3rd generation Ryzen processors and a bout of bad PR thanks to another vulnerability that affects its processors.
But the big battle is the one it faces starting in July. Intel has struggled to get its 10nm processors into production after years of delays, and it’s finally going to release 10th generation 10nm Ice Lake CPUs this summer — but for laptops. 10th generation desktop CPUs aren’t likely to see a release until 2020.
And that’s a problem with AMD releasing those new 7nm Ryzen processors in July. Having a new generation of Ryzen CPUs that offer a performance edge, power savings and a cost advantage over the current crop of Intel processors is not a good situation.
Cutting the price of its 8th and 9th generation desktop CPUs was really Intel’s only move. Doing so is going to eat into profit margins, but otherwise AMD is going to gain more market share and that wouldn’t sit well with Intel investors.
There’s a very long way to go to reach the near $59 level INTC stock was flirting with a few months ago, but the company is hoping price cuts will take the wind out of AMD’s latest Ryzen releases and keep Intel stock marching toward those April levels.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
