Intel Stock Price Plummets Over 25 Percent

Intel’s stock price plummeted by over 25 percent in the wake of this week’s quarterly results, sending its market cap below $100 billion for the first time in over a decade.

This has been a long time coming.

Dominant in PCs since the dawn of the industry, Intel has failed to make a material impact in mobile, and it’s rapidly losing ground to rivals like Nvidia and AMD in cloud and AI datacenters. It long ago lost its leadership position in chip fabrication to TSMC, which now dominates that market. And while Intel still owns the market for PC chips, Qualcomm and Microsoft have started the push to move those devices to more efficient Arm-based chips.

In other words, Intel is facing a perfect storm of competitive threats, exacerbated by decades of incompetence. Unlike its software counterpart in the Wintel duopoly, Microsoft, it’s made the wrong bets and not properly positioned itself for the post-PC era. It has emerged on the other side of this shift as a shadow of its former self.

Intel hired Gelsinger as CEO in 2021 to initiate a turnaround. But his plan to focus on chip fabrication is controversial, expensive, and time-consuming, and the long hoped for recovery has been pushed back repeatedly. Intel announced plans to build new fabs in the United States and Europe, and expand existing fabs. And it restructured to separate its fabrication operations as a separate business after receiving billions of dollars of aid from the U.S. government, courtesy of its CHIPS subsidies.

But that business lost $7 billion in 2023. And Gelsinger’s plan to rapidly evolve its chips to be more competitive has perhaps moved too rapidly: Recent generation PC chips have been unusually unreliable and buggy, forcing Intel to publicly acknowledge the issues, replace some chips for free, and extend warranties.

With each passing quarter, Gelsinger has pointed to future successes, but Intel has consistently under-performed and disappointed investors. Its most recent financial results delivered a net loss along with a massive restructuring and cost reduction effort that including laying off 15,000 employees.

The results were catastrophic. Intel’s stock price plummeted over 26 percent in the ensuing 24 hours, dropping its market capitalization by an incredible $30 billion to $96.8 billion, the first time it’s been below $100 billion since 2009. Intel lost more value Friday than it has in a single day since 1982. It was Intel’s second-worst trading day since going public in 1980.

By comparison, Nvidia is worth $2.69 trillion, TMSC is worth $720 billion, AMD is worth $233.5 billion, and Qualcomm is worth $183 billion.

Will Intel’s continued troubles trigger a non-virtuous cycle that makes a comeback even more difficult, if not impossible? That’s not clear. But at least one institutional investor thinks otherwise.

“In other circumstances, we believe we would now be having ‘going concern’ conversations with clients,” Bernstein senior analyst Stacy Rasgon told his clients. “To that end (and perhaps the one positive), subsidies and partner contributions, when combined with spending cuts and dividend suspension look set to add ~$40 billion of incremental cash to the company’s balance sheet through the end of 2025, suggesting Intel will survive (in some form) to continue the fight.”

There’s also a national security issue here, as Intel is the only major U.S. firm with chip fab capabilities: TMSC is based in Taiwan, which is under constant threat of a takeover by China. For the U.S. government, Intel is too strategic to fail.