Is Intel (NASDAQ:INTC) underappreciated, or just underwhelming? Investors should be cautious when a stock fails to rally after positive news. Get the full story on troubled Intel stock before jumping in. We’re giving Intel a “D” grade and a vote of no-confidence.
Ask yourself a few questions before we dive into the details. Do you believe in cutting losses and letting profits grow? Would you classify Intel as a “winner” or “loser” in this case? Consider Intel as an investable business for H2 2024.
Putting Your Chips on the Wrong Chipmaker
On a year-to-date basis, it seems like practically every large-cap chipmaker stock is in the green except for Intel stock. This is the case despite what should have been a major catalyst for Intel.
Think about how excited Intel’s struggling shareholders must have been when, earlier this year, the U.S. government promised to give the company as much as $8.5 billion in grants.
This will reportedly come from funding earmarked in 2022’s CHIPS and Science Act.
Intel CEO Pat Gelsinger didn’t hesitate to gloat and promote:
“Go drive by the Ohio site … There are a whole lot of cranes and concrete job trucks that are building what we believe will become the premier manufacturing location, at scale, particularly for AI chips in America.”
Gelsinger’s braggadocio was premature. Since the funding announcement, Intel stock has declined from $42 to $31. Furthermore, the tech-trade war between the U.S. and China has intensified.
Also, let’s not forget that Intel delayed its Ohio chip-factory project earlier this year. In addition, the company is reportedly halting its plan to establish a chipmaking factory in Israel.
Will Intel Get Booted From the Dow?
We could go on and on about Intel’s problems in 2024. Among the most worrisome issues are the fierce competition from Intel’s rivals in the chipmaker industry, as well as the high cost of establishing a chip-foundry business.
It could take years for Intel to achieve a good return on its foundry-business investment.
As InvestorPlace contributor Tyrik Torres pointed out, Intel’s foundry manufacturing unit “generated $18.9 billion in revenue (a 30% decrease from 2022)” and “reported $7 billion worth of operating losses in 2023, which had expanded upon the $5.2 billion loss figure of 2022.”
All of this begs a question that Intel stock optimists probably don’t want to ask: Will Intel be removed from the prestigious Dow Jones Industrial Average?
We invite you to look through the current list of Dow companies. Can you think of some companies — including a chipmaker or two — that might replace Intel?
If so, then you can certainly see the writing on the wall. It would be a harsh blow, psychologically speaking, to Intel’s loyal investors if the company gets kicked off the Dow.
Moreover, Intel stock would be removed from Dow-tracking index funds. What a shame that would be, since Intel was once a highly revered and seemingly untouchable tech titan.
Intel Stock: Not an Underdog, but Just an Underachiever
This year so far, Intel’s shareholders are falling behind the Nasdaq, the S&P 500 and the Dow Jones Industrial Average. Undoubtedly, this is frustrating as the CHIPS Act news seemed like a game-changing catalyst for Intel.
Thus, we return to the principle that, when an apparently positive catalyst doesn’t help a stock, that’s a sign of trouble.
We’ve pointed out Intel’s red flags, but now it’s up to you to decide what to do with Intel stock. At least, we can say that you’ve been warned as we’re giving the stock a “D” grade and currently aren’t recommending an investment in Intel.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
