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Santa Clara-based Intel Corporation (INTC) leads the global semiconductor industry with a market cap of $135.5 billion. It specializes in designing and manufacturing a wide range of computing and related products, including microprocessors, chipsets, and advanced driver assistance systems (ADAS) for autonomous driving.
Intel stock has considerably underperformed the broader market over the past 52 weeks. INTC has surged 10.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 27.5%. In 2024, shares of Intel are down 36.7%, compared to SPX's 11.2% gains on a YTD basis.
Zooming in further, INTC lags behind the S&P Semiconductor SPDR's (XSD) 27.1% gains over the past 52 weeks.
Intel's underperformance stems from shrinking profits and a decade-long lag in semiconductor investment, causing a tech lag compared to rivals. Add leadership changes, AI and foundry woes, heavy spending on dividends, and AI GPU market entry struggles, and doubts about its capabilities abound. On May 8, shares of Intel declined by 2.9% after the U.S. revoked its license to sell chips to Huawei, signaling an escalation in the tech cold war.
However, Intel shares rose 2.2% on May 13 after the company hired industry veteran Kevin O'Buckley to lead its critical manufacturing unit. Also, news of a potential $11 billion chip plant deal with Apollo Global Management boosted investor confidence.
For the current fiscal year, ending in December, analysts expect INTC’s EPS to decline 65.8% to $0.13. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on one other occasion.
In the last reported quarter, Intel surpassed earnings estimates but fell short on revenues, with strong growth in client computing and data center revenues offset by declines in network and edge, as well as Intel Foundry revenues.
Among the 34 analysts covering INTC stock, the consensus rating is "Hold," based on four "Strong Buy" ratings, two "Moderate Buys," 25 "Holds," and three "Strong Sells."
This configuration has been almost consistent over the past months.
On May 9, Goldman Sachs Group (GS) maintained its “Sell” rating on Intel, lowering the price target on the stock from $34 to $30. Also, on April 26, Wells Fargo analyst Aaron Rakers slashed Intel's price target to $38 from $43, maintaining a “Hold” rating. Rakers cited weak demand and gross margin fluctuations post-earnings but believe a turnaround is imminent in the second half of 2024.
The mean price target of $39.52 represents a premium of 24.2% to INTC's current levels. However, the Street-high price target of $68 suggests an ambitious upside potential of 113.6%.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
