In this article, we discuss the 10 worst performing blue chip stocks in 2024.
Strong Market Performance Amid Uncertainty
The third quarter ended with a bang, with all the major indices near record highs as investors shunned macroeconomic instability, soaring geopolitical tensions and U.S. election uncertainty. Strong gains in the quarter were fuelled by expectations of lower interest rates heading into year-end and growing expectations of a soft landing of the U.S. economy.
Artificial intelligence has been a big success story that has helped push the equity markets to record highs. Against the overall trend, the current bull market had a better second year, up 33% compared to the historical average of 13%, and a better first year, up 22% compared to the historical average of 44%, according to BofA. It’s also important to remember that even bull markets’ third years of growth can be rocky.
READ ALSO: 10 Most Promising Future Stocks According to Analysts and 10 Most Promising Growth Stocks According to Hedge Funds.
While the S&P 500 has gained over 60% since the 2022 lows, researchers at BofA note that there could be a significant pullback in the near future.
“Historical studies suggest that the third year of a typical bull market tends to be unremarkable as a mild bout of de-rating overshadows humdrum earnings growth,” BofA equity strategist Ritesh Samadhiya said in a note to clients.
Economic Concerns and Investment Opportunities
While voicing concern that the economy is running at a hotter-than-desired pace, Federal Reserve Governor Christopher Waller hinted that future interest rate cuts would be less drastic than the significant move in September. According to policymakers, recent employment, inflation, GDP, and income reports indicate that the economy might not slow down.
“While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said in prepared remarks for a conference at Stanford University.
The sentiments come as investors remain cautious about the long-term outlook amid soaring geopolitical tensions and economic uncertainties. The growing uncertainties have been one of the catalysts behind some of the worst-performing blue chip stocks in 2024.
Nevertheless, some underperforming stocks may allow investors to purchase the long-term decline. However, many are just dealing with issues unique to their company, such as bloated balance sheets or broken business models.
It might be a while before the market bounces back. In the interim, investors should be aware of the market’s possible value stocks. Even if it is not popular or profitable in the short term, the long-term benefits of investing wisely and deviating from the crowd can be significant, according to the contrarian investing philosophy.
Investing during a market downturn may present chances for sizable returns in the long term. We examine the top 10 blue-chip losers to date and potential opportunities for investors to acquire them.
Source: Pexels
Our Methodology
To prepare this article, we began by listing all the holdings of the various blue chip ETFs like E.A. Bridgeway Blue Chip ETF, Vanguard Mega Cap ETF, and DOW 30. We then sourced the year-to-date share price returns for each company. Based on these returns, we ranked the companies in descending order.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Worst Performing Blue Chip Stocks in 2024
10. Pfizer Inc. (NYSE:PFE)
Year to Date Return: 0.5%
Number of Hedge Fund Holders: 84
Pfizer Inc. (NYSE:PFE) is one of the worst-performing blue chip stocks in 2024; its fortunes have taken a hit with the end of the COVID-19 pandemic. While the company has made a name for discovering, developing, and selling pharmaceutical products, its stock has been under pressure, up by a partly 0.55% year to date compared to a 24% gain for the S&P 500.
Even though Pfizer Inc. (NYSE:PFE) is a strong corporation, it hasn’t been able to overcome its reputation as an afterthought after its tremendous success earlier this decade as a co-developer of the coronavirus vaccine Comirnaty (in collaboration with German biotech BioNTech). The business’s post-pandemic performance has sometimes been stellar.
Pfizer Inc. (NYSE:PFE) gained notoriety for its coronavirus vaccine, becoming the global best-selling pharmaceutical product. Additionally, this contributed to Pfizer’s record-breaking yearly revenue of over $100 billion in 2022.
However, Pfizer Inc. (NYSE:PFE)’s revenue opportunity decreased over the past year and a half as the demand for the vaccine decreased, and the impending patent expirations of other popular products have exacerbated the company’s problems. Because of all of this, Pfizer’s stock has underperformed over the last three years, falling more than 30%.
Additionally, Pfizer has to deal with the important patent expirations of some of its older products, which previously predicted that this would cost the company $17 billion in lost revenue between now and 2030. Eliquis, a blood thinner, and Ibrance, a treatment for breast cancer, are two upcoming major exclusivity losses.
However, Pfizer Inc. (NYSE:PFE) has prepared for this moment. It is currently wrapping up a record-breaking product launch run, bringing 19 new products or indications to market in just 18 months.
Parnassus Investments’ Parnassus Value Equity Fund stated the following regarding Pfizer Inc. (NYSE:PFE) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
9. Comcast Corporation (NASDAQ:CMCSA)
Year to Date Return: -1.98%
Number of Hedge Fund Holders: 61
Media and technology juggernaut Comcast Corporation (NASDAQ:CMCSA) has been under pressure over the past few years amid the cord-cutting menace and increased focus on streaming. Likewise, the cable giant stock has slipped 1.98% for the year as investors question its growth metrics.
The company’s sentiments took a hit after it delivered mixed second-quarter results that raised serious questions about its core business. While earnings came in at $1.21, beating analysts’ estimate of $1.12 a share, the slowdown in revenue growth raised serious questions. Revenue was down by 3% to $26.69 billion, missing estimates of $30.02 billion.
The revenue drop resulted from Comcast Corporation (NASDAQ:CMCSA)’s underperformance in content and experience sales. Sales in the segment were down by 7.5% to $10.06 billion. A 27% drop in studio revenue and an 11% drop in theme park sales were the main drivers of the decline.
Compared to the popular films it released in the same quarter last year, the company blamed the park’s declines on fewer visitors and its movie studio’s sales on lower theatrical revenue.
Likewise, the media giant is trying to unlock new growth opportunities by expanding its Peacock streaming service, which provides a new avenue for revenue generation and growth. Comcast’s management seems hopeful that the company’s studio and theme park sales will improve.
Amid the underperformance, Comcast Corp. (NASDAQ:CMCSA) has remained a dividend king as it returns value to shareholders thanks to a solid balance sheet. The stock currently yields 2.95% while trading at a discount with a price-to-earnings multiple 9.
As of the close of Q2 2024, 61 hedge funds in Insider Monkey’s database held stakes in Comcast Corporation (NASDAQ:CMCSA), compared with 63 in the preceding quarter. These stakes have a total value of over $3.6 billion. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q2.
8. Tesla, Inc. (NASDAQ:TSLA)
Year to Date Return: -9.50%
Number of Hedge Fund Holders: 85
Tesla, Inc. (NASDAQ:TSLA) is one of the worst-performing blue chip stocks in 2024; the company has come under scrutiny amid soaring competition in electric vehicles. While the introduction of robotaxi was expected to bolster the company’s sentiments, that was not the case.
The electric vehicle giant stock is down by about 9.50% for the year, underperforming the S&P 500, which is up by about 24%. Macroeconomic challenges have hampered Tesla in recent quarters. The company has repeatedly lowered prices to increase demand because inflation and high interest rates have suppressed consumer car spending.
With a 17.6% market share in sales of battery electric vehicles as of July, Tesla, Inc. (NASDAQ:TSLA) was the industry leader. However, compared to last year’s time, its market share decreased by 3.3 percentage points. Net income in Q2 fell 43% to $0.52 per diluted share, operating margin fell 3.3 percentage points, and revenue rose 2% to $25.5 billion.
However, according to Tesla, Inc. (NASDAQ:TSLA), its next big development will be autonomous driving technology. Customers can already purchase subscriptions to its full self-driving (FSD) software. Musk told CNBC last year that FSD software could increase Tesla’s gross margin to 70%, which would be almost four times higher than it was in the most recent quarter. Crucially, Tesla’s data advantage makes it one of the businesses most suited to profit from autonomous driving technology. Compared to other automakers, it has a significantly larger amount of FSD data—roughly 1.6 billion miles—and a large amount of high-quality data is necessary to train the deep learning models that give FSD software the ability to make decisions.
In total, 85 hedge funds were long Tesla, Inc. (NASDAQ:TSLA) in the second quarter, with a total stake value of $4.9 billion.
Here is what ClearBridge Small Cap Value Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) manufactures electric vehicles, related software and components, and solar and energy storage products. The stock contributed as Tesla continued to drive vehicle manufacturing costs lower, accelerate the launch of new models, and invest heavily in its lucrative AI initiatives. Shareholders reaffirmed the CEO’s compensation plan, alleviating personnel and legal uncertainties. Despite material operational complexities resulting in significant shutdowns of key manufacturing facilities and lower sales volume, Tesla presented better-than-expected margins in the quarter. It expects to launch a lower cost model as soon as late 2024, which should result in accelerated revenue growth, reduced manufacturing costs, and increased factory utilization. The company continued to advance its autonomous driving capabilities, expanding its already significant data centers and developing its humanoid robot Optimus. These investments increased confidence in the attractive growth opportunities that remain ahead.”
7. Occidental Petroleum Corporation (NYSE:OXY)
Year to Date Return: -10.16%
Number of Hedge Fund Holders: 62
Occidental Petroleum Corporation (NYSE:OXY) is an energy giant that acquires, explores, and develops oil and gas properties. The company has had a rough go in recent months, resulting in the stock shedding more than 10% in market value, making it one of the worst-performing blue chip stocks in 2024, given that the S&P 500 is up by about 20%.
Oil prices are declining despite strong U.S. demand, and OPEC+’s expanding its production cuts through 2025 has hurt the company’s core business. The entire oil and gas production industry has been negatively impacted by the drop in crude oil prices over the past year, which went from about $90 per barrel to $70 per barrel.
Despite the oil price slump, Occidental Petroleum Corporation (NYSE:OXY) owns roughly 2.8 million net acres of land in the Permian Basin, where it is one of the biggest producers. It recently acquired CrownRock for $12 billion, solidifying its position. The acquisition resulted in a 33% increase in Occidental’s inventory of breakeven locations with prices below $40 per barrel.
Occidental Petroleum Corporation (NYSE:OXY) issued $9.1 billion in new debt and invested $1.2 billion in existing debt to finance most of its CrownRock deal. Its short-term goal is to pay off debt with excess free cash flow. Within a year of closing that deal, the company wants to reduce debt by $4.5 billion by selling assets and using free cash flow. Even as it tries to reduce its huge debt burden, the company still yields 1.63% on dividends.
By the end of Q2 2024, the number of hedge funds with stakes in Occidental Petroleum Corporation (NYSE:OXY) increased to 62, up from 61 in the previous quarter. This modest rise indicates a growing interest in Occidental Petroleum among institutional investors. The total value of these stakes is significant, surpassing $18.50 billion.
6. United Parcel Service, Inc. (NYSE:UPS)
Year to Date Return: -12.98%
Number of Hedge Fund Holders: 44
Package delivery juggernaut United Parcel Service, Inc. (NYSE:UPS) is turning out to be one of the worst-performing blue chip stocks in 2024, down by about 12.98% for the year. Its woes and underperformance stem from declining delivery volumes in its core U.S. domestic package market.
The volume drops are especially concerning because they followed periods of extraordinary growth brought on by the lockdowns. A slowing economy led to a decline in demand, and that growth incentivized package delivery companies to increase supply, resulting in a notable capacity surplus in 2023.
Deteriorating economic conditions have fueled the weak delivery volumes amid the high interest rates. Nevertheless, United Parcel Service, Inc. (NYSE:UPS)’s outlook should receive a boost in the U.S. Federal Reserve cutting interest, which is expected to boost consumer purchasing power, fuelling a spike in shopping trends leading to higher shipping volumes.
In the long term, lower interest rates will unavoidably promote economic expansion, which typically translates into increased packages delivered. Long-term investors who are prepared to bear the possibility of negative news in the near future may be persuaded to purchase UPS as it is trading at a discount with a price-to-earnings multiple of 14 after a significant pullback.
Likewise, UPS has proved to be a solid investment play for generating passive income, as the stock currently yields 4.84% on dividends. At the end of Q2 2024, 44 hedge funds reported holding stakes in United Parcel Service, Inc. (NYSE:UPS), with a total value of $1.31 billion.
Here is what Artisan Partners’ Artisan Value Fund said about United Parcel Service, Inc. (NYSE:UPS) in its first quarter 2024 investor letter:
“United Parcel Service, Inc. (NYSE: U.P.S.) was a Q4 2023 purchase. When we initiated our position, shares were under pressure due to concerns about its new labor contract diverting volumes and driving up costs, as well as the continued normalization of volumes following COVID-related gains. The stock moved higher after we purchased it but gave up those gains in January when the company reported weaker-than-expected shipping volumes and a decline in revenue in the prior quarter. Despite the long-term growth tailwinds from the secular shift toward e-commerce, the shipping business is still cyclical, so disappointments will happen. However, we welcomed the market’s short-term focus as it provided us an opportunity to purchase U.P.S. at an undemanding valuation of less than 11X our view of normalized earnings. U.P.S. is a good transport operation that easily earns its cost of capital, generates significant free cash, has a wide economic moat, has a strong financial profile and pays an attractive dividend yielding 4%. With the new 5-year labor agreement completed, we believe U.P.S. can focus on regaining lost volume and improving its cost structure.”
5. Adobe (NASDAQ:ADBE)
Year to Date Return: -14.02%
Number of Hedge Fund Holders: 107
Adobe (NASDAQ:ADBE) became the first software company to adopt a subscription model for its solutions. While the company has enjoyed tremendous success in offering products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content, it finds itself at a crossroads.
The stock is down by about 14.02% for the year, affirming its status as one of the worst-performing blue chip stocks in 2024. The underperformance comes against concerns about the company’s long-term prospects.
Adobe (NASDAQ:ADBE)’s Digital Media division, which includes its flagship Photoshop and Illustrator, accounts for almost three-quarters of its total revenue. The remainder is derived from its enterprise clients’ Digital Experience services. Over the previous two fiscal years, both business divisions struggled with slower sales growth.
The company’s practice of charging prorated penalties to users who terminate their subscriptions after the first 14 days has been the subject of a Federal Trade Commission (FTC) investigation. The FTC could make its cloud services less sticky by prohibiting its cancellation fees, while Adobe acknowledged that it might have to pay “significant monetary costs or penalties” to resolve that investigation.
Amid the struggles, Adobe (NASDAQ:ADBE) delivered solid third-quarter results, delivering $5.41 billion in revenue, an 11% increase from the previous year. Adobe’s earnings-per-share (EPS) totalled $3.76 as opposed to a range of $3.45 to $3.50.
Nevertheless, Investors had an issue with Adobe’s guidance for the year as it fell short of Wall Street’s expectations. While Wall Street was expecting roughly $5.61 billion, Adobe (NASDAQ:ADBE) projected between $5.5 billion and $5.55 billion for the fourth quarter. This would suggest growth of 8.9% to 9.9% annually, which some investors might find a little slow.
In terms of these valuation metrics, Adobe is costly as it trades at a price-to-earnings multiple of 24. However, it is marginally below its historical averages on both counts.
Polen Global Growth Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q2 2024 investor letter:
“With Adobe Inc. (NASDAQ:ADBE), in some ways, we see it as a microcosm of the market’s “shoot first, ask questions later” approach to categorizing AI winners and losers. In the early part of last year, Adobe came under pressure with a perception that generative AI (GenAI) would represent a material headwind to their suite of creative offerings. In short order, the company introduced its GenAI offering, Firefly, which shifted the narrative to Adobe as a beneficiary with a real opportunity to monetize GenAI in the near term. Earlier this year, that narrative was again challenged as the company reported a slight slowdown in revenue growth. Results in the most recent quarter were robust as the company raised its full-year forecast across a number of key metrics and showcased better-than-expected results.”
4. Charter Communications Inc. (NASDAQ:CHTR)
Year to Date Return: -14.91%
Number of Hedge Fund Holders: 48
Charter Communications, Inc. (NASDAQ:CHTR) is a broadband connectivity and cable operator company that serves residential and commercial customers. It is one of the companies that has felt the full force of people cutting the cord in favour of streaming networks.
With people steadily canceling their cable service, Charter Communications has seen its core business come under immense pressure. In Q2, Charter Communications, Inc. (NASDAQ:CHTR)’s Spectrum lost 154,000 residential broadband users; 5,000 new business accounts were added to compensate for this decline. These subscriber declines in both situations build upon and quicken patterns that began to emerge in the middle of last year.
In the second quarter, Charter Communications, Inc. (NASDAQ:CHTR)’s residential and business internet users dropped from 149,000 to 30.4 million. Consequently, revenue only increased by 0.2% to $13.7 billion, which was more than the $13.6 billion forecast.
Profits per share improved from $8.05 to $8.49, helped by share buybacks, and adjusted earnings climbed 2.6% to $5.7 billion, exceeding estimates of $7.98. The company reduced the number of shares outstanding by about 1% during the quarter by repurchasing 1.5 million shares for $404 million.
Although a competitive broadband market is hindering growth in core subscribers, Charter Communications, Inc. (NASDAQ:CHTR) is experiencing some success in rural markets thanks to a government initiative to increase broadband access in these areas and its push into mobile. With a price-to-earnings ratio of 12, the stock is inexpensive enough to move higher with only slight profit gains, especially as the company continues its share buybacks.
Parnassus Value Equity Fund stated the following regarding Charter Communications, Inc. (NASDAQ:CHTR) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer, NICE and Charter Communications, Inc. (NASDAQ:CHTR). NICE is a leading cloud contact center software company. Charter’s stock had fallen due to near-term concerns, which we believe will not have a major impact on the long-term value of the business. Charter Communications has had several issues that created short-term uncertainty. We assessed that these issues have limited impacts on the long-term value of the business and initiated a position to take advantage of the stock’s historically low valuation.”
3. NIKE, Inc. (NYSE:NKE)
Year to Date Return: -24%
Number of Hedge Fund Holders: 66
NIKE, Inc. (NYSE:NKE) is one of the most iconic brands in the world as it designs, develops and markets some of the most sought-after athletic footwear apparel equipment and accessories. Nevertheless, it has turned out to be one of the worst-performing blue chip stocks in 2024, going down by about 24% year to date.
The underperformance comes against the backdrop of disappointing results that underscore the fact that the company desperately needs a turnaround. In its most recent fiscal first quarter, 2025, revenue was down by 10% to $11.9 billion as earnings fell 26% to $0.70 a share. Revenue in the company’s direct-to-consumer arm was down 13%
The weak financial results come from NIKE, Inc. (NYSE:NKE)’s core business feeling the full brunt of high interest rates and high inflation that have significantly affected consumer purchasing power.
In an effort to lessen its reliance on outside merchants, Nike has increased its direct-to-consumer Nike Direct channel, which includes both its online store and physical locations, over the last ten years. At first, that tactic protected its brand from markdowns by third parties, locked in its customers, and expanded its moat against rivals.
Even as it attempts to revitalize its business by introducing new products, shifting to a product mix that includes a higher percentage of luxury shoes, and strengthening its ties with customers through sponsored events and activities, NIKE, Inc. (NYSE:NKE) anticipates that the slowdown will persist. In fiscal 2025, analysts predict a 7% and 28% drop in revenue and earnings, respectively.
Nike’s dividend yield has increased while its stock price has stagnated. Nike announced a 9% dividend increase in November 2023, the 22nd year in a row that the company has done so. Nike’s current yield is a commendable 1.8%. The value of Nike has also decreased.
According to Insider Monkey’s database, 66 hedge fund portfolios held NIKE, Inc. (NYSE:NKE) at the end of Q2 2024, down from 71 in the previous quarter.
Here is what Coho Relative Value Equity Strategy said about NIKE, Inc. (NYSE:NKE) in its Q2 2024 investor letter:
“While we believe each of those companies is performing in line with or better than our expectations and that the moves lower are unjustified, both CVS and NIKE, Inc. (NYSE:NKE) reported disappointing performance in recent results. For Nike, the company reported mixed fourth quarter Fiscal 2024 results and weak Fiscal 2025 guidance, reflecting top line pressure from lifestyle product slowing, lower digital sales and increased macro headwinds in international markets. To manage through the decline in sports footwear and apparel demand, the senior leadership team is focused on cutting costs and reinvesting in marketing and innovation to drive sales. The company is starting to see green shoots for performance product innovation and has historically emerged stronger from these downturns due to benefits from a leading market position and scale.”
2. Boeing Co (NYSE:BA)
Year to Date Return: -37.81%
Number of Hedge Fund Holders: 42
Boeing Co (NYSE:BA) has carved a niche as one of the largest airplane manufacturers. However, its planes’ safety concerns have sent shockwaves in the industry, denting the company’s fortunes. Over the past year, the stock has shed more than 50% in market value and is down by about 37.81% for the year, making it one of the worst-performing blue chip stocks in 2024.
Boeing Co (NYSE:BA)’s 737 MAX was grounded for 18 months due to two deadly crashes, and an extensive investigation into the company’s manufacturing methods resulted in major delays in other aircraft programs. Failure to meet internal production targets has caused airlines to search for alternatives, depriving Boeing of the revenues it needs most.
The company’s woes have been exacerbated by the failure to agree with the International Association of Machinists and Aerospace Workers (IAM) Union District 751 over a new contract. The stalemate has only made it difficult for the company to ramp up production and meet delivery schedules.
Consequently, the first half of 2024 saw a sharp drop in deliveries of Boeing Co (NYSE:BA)’s narrow-body 737 as management was forced to slow deliveries due to manufacturing quality issues. By the end of the year, management aimed to return to a monthly rate of 38.
Without a doubt, Boeing faces difficulties, and it is uncertain if it will be able to finance the next generation of narrow-body aircraft within the next ten years. Nevertheless, a multi-year backlog guarantees that it can overcome its challenges.
By the end of Q2 2024, 42 out of the 912 hedge funds tracked by Insider Monkey had invested in Boeing Co (NYSE:BA). This notable interest reflects significant confidence in Boeing’s potential among institutional investors.
1. Intel Corp. (NASDAQ:INTC)
Year to Date Return: -50%
Number of Hedge Fund Holders: 75
Intel Corp. (NASDAQ:INTC) is one of the largest semiconductor companies that designs, develops and sells computing and other related products. While semiconductors have seen their market value skyrocket amid artificial intelligence, that has not been the case for Intel.
The company has lost more than half its market value over the past five years and is down by about 50% for the year, affirming why it is one of the worst-performing blue chip stocks in 2024. The underperformance comes from the company struggling with production delays, chip shortages, and abrupt strategic changes under several CEOs.
Intel Corp. (NASDAQ:INTC) produced the tiniest, densest, and most potent x86 CPUs worldwide for many years. However, each generational upgrade made smaller chips more difficult and costly. Consequently, a large number of chipmakers, including AMD, outsourced the entire manufacturing process and spun off their capital-intensive foundries.
Intel Corp. (NASDAQ:INTC) fell behind TSMC and Samsung’s foundries in the “process race” to produce smaller and denser chips, but it also declined to follow AMD’s lead and become a fabless chipmaker. It attempted to catch up, but those disorganized attempts slowed down the development and manufacturing of its chips.
Many of its customers switched to AMD in order to secure a consistent supply of higher-end chips made by TSMC after becoming dissatisfied with its ongoing delays and shortages.
Amid the struggles, the company’s long-term prospects are slowly improving, having inked a $3 billion deal as part of the CHIPS act with the U.S. Pentagon. Likewise, the company’s P.C. chip, Intel 7, derived from the company’s 10-nanometer (nm) process, is increasingly eliciting strong demand, allowing the company to regain market share in the P.C. market.
Here is what ClearBridge Large Cap Value Strategy said about Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter:
“While the market environment clearly was a headwind in the third quarter, several of our large positions also faced challenging conditions, which negatively impacted results. In the information technology (IT) sector, Intel Corporation (NASDAQ:INTC) has come under additional pressure due to continued softness in the company’s core PC and server markets as well as concerns on the company’s longer-term competitive position. While Intel’s turnaround is not happening overnight, we are constructive on the outlook into 2025: the company’s product positioning should be much improved and it should be positioned to gain market share in a cyclical upswing in which it has strong earnings power. A somewhat adverse spending environment due to AI myopia has weighed on shares, but we still think the market is undershipping PCs and general servers following a COVID normalization period that saw demand get pulled ahead and then languish as companies froze IT budgets. The installed base is now getting older, and we expect a strong refresh cycle into next year. The delay is actually beneficial to Intel, whose product positioning will be all the more improved. While our investment case is not predicated on an M&A transaction, and we believe one is unlikely, the expression of interest in the company speaks to the value of the assets, which we think still trade at a meaningful discount to fair value.”
While we acknowledge the potential of INTC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than INTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
