1. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Share Price Performance Year-to-Date: -52.22%
Intel Corporation (NASDAQ:INTC) is a global technology leader known for designing and manufacturing a range of computer components, including microprocessors, chipsets, and networking devices. It has been instrumental in shaping the modern computing industry.
It is known for its contributions to both the consumer and enterprise markets, supplying processors to major tech companies, and maintaining a strong presence in the PC and server industries.
Intel (NASDAQ:INTC) tops our list of worst-performing Dow stocks as it faced a plethora of issues in 2024. It fell short of expectations despite progress in product and process developments in Q2. The company faced challenges, including new export restrictions and faster ramping of AI CPUs, which pressured margins.
Moreover, its struggling foundry business and a drop in PC chip sales were one of the main reasons for its decline. The company has faced heavy competition from Taiwan Semiconductor and reported significant losses, including a $2.8 billion operating loss in the second quarter, totaling $5.3 billion for the first half of the year.
Nevertheless, Intel (NASDAQ:INTC) is planning to make some amends for the future and has planned a cost reduction initiative, including a 15% headcount reduction by 2025, reducing operating expenses to $17.5 billion in 2025, with further reductions expected in 2026. Capital expenditures will also decrease, with gross CapEx for 2024 targeted between $25 billion and $27 billion, and net spending between $11 billion and $13 billion. The dividend will be suspended to prioritize liquidity for long-term investments.
Here is what ClearBridge Large Cap Value 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 Intel Corporation (NASDAQ: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.
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