We recently compiled a list of the 10 Worst Performing NASDAQ Stocks in 2024. In this article, we are going to take a look at where Intel Corp. (NASDAQ:INTC) stands against the other Worst Performing NASDAQ Stock in 2024.
Factors Driving Market Growth
Markets have been soaring for the better part of the year, with pullbacks acting as entry levels from where investors have joined and pushed the market higher. While artificial intelligence was one of the factors that drove many tech stocks higher, earnings results that were better than expected also had a significant impact.
Similarly, a resilient US economy that has stayed clear of recession amid high interest rates and inflation has also supported the upward momentum. With the NASDAQ and other major indices at all-time highs, investors are becoming increasingly concerned whether the strong upward momentum is sustainable.
READ ALSO: 10 Most Promising Future Stocks According to Analysts and 10 Most Promising Growth Stocks According to Hedge Funds.
Challenges and Investor Concerns
Valuations appearing overstretched after one of the longest bull runs are one factor that is sending jitters among the investment community. Similarly, concerns over the negative impact of high interest rates and uncertainty over the US election are slowly curtailing the upward momentum.
Bryn Talkington, managing partner of Requisite Capital Management, believes markets will remain choppy heading into year-end owing to the uncertainty around the US election.
“Until the election is over and we can confirm gridlock, I think at the headline number we’re not going to do much, but I think underneath the surface we’re going to see the haves and have nots,” she said.
Nevertheless, it is the impact of the soaring geopolitical tensions in the Middle East that threatens to affect supply lines that are keeping the markets on edge. The prospects of energy prices surging and fueling inflation on Israel attacking Iran is also taking a significant toll on investor’s sentiments on equities.
While interest rate cuts were expected to be the catalyst to push the equity markets to record highs, that was not the case, as everything seemed to have already been priced. Paul Christopher, head of investment strategy at Wells Fargo Investment, believes the US Federal Reserve is unlikely to cut aggressively as the better-than-expected jobs report in September and renewed worries of a spike in inflation act as a deterrent.
“Just really not ready to cut quite as aggressively as the markets had previously priced. I think if you take November from a half a point down to a quarter point hike, that’s not really a big deal, but it does require some adjustment in markets. There may be some adjustments to rate expectations for December and January as well,” he told CNBC’s “Squawk Box Asia” earlier this month.
While the US economy does not show enough deterioration to justify aggressive cuts, there are stocks listed on the NASDAQ that have underperformed, attributed to a number of factors. Top on the list are companies whose core businesses are negatively impacted by high interest rates that tend to affect consumer purchasing power.
Likewise, some of the worst-performing stocks in the NASDAQ have also taken a hit on high inflation. While inflation has started showing signs of edging lower even as the Fed continues to cut rates, some of the worst-performing stocks are showing signs of bottoming out as macroeconomics improves.
The October BofA Global Fund Manager survey indicates that investors are more optimistic than they have been in four years. 74% of investors think the United States will avoid a recession, demonstrating their optimism about the economy.
Likewise, Michael Hartnett, an investment strategist at BofA, said that investor sentiment is rising due to expectations of further rate cuts by the U.S. Federal Reserve and hopes that Beijing will release more stimulus to strengthen its economy.
Pixabay/Public Domain
Our Methodology
We utilized a stock screener to find NASDAQ-listed stocks with market caps exceeding $2 billion as of October 16. We then sorted the stocks in descending order based on their year-to-date share price performance. From this dataset, we identified the NASDAQ stocks with the largest YTD share price declines as of October 16. The following stocks are listed in descending order of their share price performance.
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).
Intel Corp. (NASDAQ:INTC)
Year to Date Gain: -52.30%
Number of Hedge Fund Holders: 75
Intel Corporation (NASDAQ:INTC) is the worst-performing NASDAQ stock in 2024, having shed about 52.30% in market value year to date. Intel’s struggling foundry business is primarily to blame for its problems, exacerbated by a slowdown in PC sales that has affected its sales for PC chips.
Consequently, Intel Corporation (NASDAQ:INTC) has accumulated losses for the better part of the year as it faces stiff competition in chip manufacturing from Taiwan semiconductors. In the second quarter, it posted a $2.8 billion operating loss, bringing its loss for the first half of the year to $5.3 billion.
In addition to the difficulties of quickly implementing new production techniques, Intel has had to deal with a severe decline in the PC market and data center clients who preferred AI chips to general-purpose CPUs. In order to stabilize its finances, the company has been forced to take drastic measures, announcing a $10 billion cost-cutting program that includes 15% employee layoffs.
As it stands, Intel Corporation (NASDAQ:INTC) is in a transition phase as it tries to revitalize its growth prospects. It is making significant investments in manufacturing in an effort to transform a small foundry into a competitor of market leader TSMC.
For Intel, the 18A process is essential to its future chip designs as it promises enhanced performance and power efficiency. The process will be the primary attraction for the foundry business, and the company intends to use it to create many of its own products.
Amazon and Microsoft are high-profile clients that Intel has already attracted with the 18A process. Nevertheless, it will take time to generate significant external revenue from Intel 18A, which will start scaling up production next year.
According to the Insider Monkey database, 75 hedge fund portfolios included Intel Corporation (NASDAQ: INTC) at the end of the second quarter of this year. This is a slight decrease from the previous quarter, where 77 hedge fund portfolios held Intel Corporation.
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.”
Overall INTC ranks 1st on our list of 10 Worst Performing NASDAQ Stocks in 2024. 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, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
