Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Intel Is Left Behind as Chip Stocks Roar Back

Stock Markets Aug 17, 2022 15:20
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
NDX
-2.86%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
-2.11%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
INTC
-2.76%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
QCOM
-3.44%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CTXS
+0.04%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AMZN
-2.72%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

(Bloomberg) -- Intel Corp (NASDAQ:INTC) has been conspicuously missing from a rebound in technology stocks that’s lifted almost every other member of the Nasdaq 100 since the index bottomed in June.

The world’s biggest maker of computer processors is one of just six companies in the tech-heavy benchmark whose shares have lost ground since June 16. Meanwhile, the index has jumped 23% as cheaper valuations and optimism that inflation is cooling have enticed traders to snap up beaten-down tech stocks.

The lagging performance is the latest sign that investors are still hesitant to buy into Chief Executive Officer Pat Gelsinger’s effort, which is stretching into its 18th month, to restore Intel’s chip manufacturing prowess. While a reduced profit and revenue forecast in late July didn’t help, similar weak forecasts from peers like Nvidia (NASDAQ:NVDA) and Qualcomm (NASDAQ:QCOM) haven’t stopped those stocks from rallying. Shares of both companies have gained more than 20% since mid-June.

“Investors have put Intel in the too-hard-to-turn-around bin,” said Kim Forrest, founder and chief investment officer at Bokeh Capital Partners. “People have a shorter-term view than the stock can promise.”

After dominating the semiconductor industry for decades, Intel lost its lead in semiconductor process technology, allowing companies like Taiwan Semiconductor Manufacturing Co. to overtake it. Gelsinger has pledged to restore the company’s leadership in advanced production by spending tens of billions of dollars to build new factories in the U.S. and Europe and retool existing ones. 

The company’s weak stock performance, however, shows investors are realizing that even if Gelsinger is successful, the turnaround will take a long time. With Intel bleeding market share with products built on old manufacturing technology, there may be more disappointing earnings reports in the interim. Until it can sort out those issues, growth will be hard to come by.

Wall Street analysts have taken an ax to Intel’s profit estimates after the disappointing second-quarter earnings report. Projections for 2023 earnings per share have fallen by 28% over the past month, according to data compiled by Bloomberg. That compares with a drop of about 13% for semiconductor-related companies in the S&P 500, reflecting deteriorating demand for many types of chips amid rising inventories and slowing economic growth.

The lower profit outlook has made Intel more expensive relative to anticipated earnings. At almost 15 times profits over the next 12 months, Intel is priced near the highest in the past decade.

Intel’s combination of elevated valuation and uncertain timing on the duration of the turnaround is keeping Siddharth Singh, founder and chief investment officer at Ironhold Capital Management, on the sidelines for now. 

“They have such an incredible position if they can just pick up on that technological slack,” he said.

Tech Chart of the Day

The Nasdaq 100 index is on course for its fifth consecutive week of gains and the rebound from its mid-June low is bringing the tech-heavy index closer to the average analyst price target. The last time the index traded above the average was back in September 2020. Futures contracts on the benchmark dropped 0.7% in trading Wednesday before US markets opened. 

Top Tech Stories

  • Mounting concern over semiconductor demand is sending shudders through North Asia’s high-tech exporters, which historically serve as a bellwether for the international economy.
  • Elon Musk says he was joking about buying English football club Manchester United Plc and isn’t in the market for any sports teams.
  • Citrix Systems Inc (NASDAQ:CTXS) bankers are doing whatever it takes to get one of the biggest buyout financings of the past decade off their books, pitching investors a revised $15 billion deal to help limit potential losses as the credit market thaws.
  • Ratan Tata, the octogenarian industrialist who steered the $128 billion Tata Group for decades, has backed Goodfellows, a startup that connects senior citizens with young graduates for meaningful friendships.
  • SoftBank Group Corp.-backed Socar Inc. just halved its listing target because of deteriorating market conditions. That’s doing little to change Chief Executive Officer Jake Park’s resolve to triple sales and improve margins at the company, which is South Korea’s largest car-sharing service operator.
  • After years of revising and updating its election strategy, Meta Platforms Inc. is pulling out a familiar playbook for the US midterms, sticking with many of the same tactics it used during the 2020 general election to handle political ads and fight misinformation.
  • Amazon.com Inc (NASDAQ:AMZN) workers have filed a petition to hold a union election at a company warehouse near Albany, New York.
    • Amazon accused the US Federal Trade Commission of harassing its founder, Jeff Bezos, and Chief Executive Officer Andy Jassy in the agency’s investigations of the e-commerce giant’s business practices.

©2022 Bloomberg L.P.

 

Intel Is Left Behind as Chip Stocks Roar Back
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email