Intel stocks slump – can the chipmaker make a comeback?
Semiconductor maker, Intel, missed the boom in the sector thanks to its focus on PCs. Is it too late to catch up with its rivals?


Running chipmaker Intel may have been a “dream job” for CEO Pat Gelsinger when he began his tenure, says Asa Fitch in The Wall Street Journal. But three years on, things look “increasingly nightmarish”. Intel’s stock slumped by 26% to a 15-year low on 2 August, knocking more than $30 billion off the group’s market value.
The collapse came after disappointing results and an outlook notable for unexpectedly low revenue and profit-margin forecasts. Intel also said it would lay off 15,000 employees, target $10 billion in cost cuts next year and suspend dividend payments in the fourth quarter, the first time in more than three decades the company has not made a payout.
The latest earnings are a reminder of just how “woefully” Intel “lags behind the likes of Nvidia and TSMC”, says The Economist. For decades, Intel “dominated global chipmaking”, cornering the market for personal computers (PCs) thanks to the “Wintel” alliance with software giant Microsoft.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, a series of “missteps” caused it to fall behind. Thanks to its focus on PCs, it missed the boom in demand for mobile phone chips. As a result, the company “is miles behind when it comes to designing [artificial intelligence] chips”, and will need to make “big investments” to catch up with the likes of TSMC.
Can Intel make a comeback?
Gelsinger has sought to overhaul Intel’s business model “with a push to become a major foundry player”, says Lex in the Financial Times. It has committed to “tens of billions of dollars to build new factories to make chips for other companies”. However, while these factories are “years away”, the spending spree has “pushed up Intel’s costs and hurt profitability”.
Meanwhile, PC sales are falling, and demand for data centres is falling amid “a shift in spending that prioritises [AI] chips dominated by Nvidia”. What’s more, things are set to get “tougher still” after the US government revoked Intel’s licence to supply chips to China’s Huawei Technologies in May.
Intel’s room for manoeuvre is further constrained by its debt, says AJ Bell’s Russ Mould. The net cash pile peaked at $16 billion in 2004; it has been whittled away and replaced by net borrowings, thanks partly to the billions Gelsinger’s predecessors spent on share buybacks to “goose earnings-per share figures”. If Intel “still had those $63 billion its ability to keep on investing to defend its competitive position would surely be enhanced”.
Given Intel’s financial and operational woes, suspending the dividend is the right idea, especially since AMD, one of Intel’s rivals, doesn’t pay a dividend, says Robert Cyran for Breakingviews. However, slashing investment and firing a large number of employees, while intended to reduce the “short-term pain”, will only “make regaining the technological lead from arch-rival [TSMC] even harder”.
Despite support from the US government, it’s “increasingly hard” to see how Intel will solve its underlying problem: the “force of inexorably falling revenue and margins” looks “inescapable”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
Watch out for fake Steven Bartlett video – you could lose thousands
Scammers are trying to tap into the Trump tariffs chaos, but knowing what to look out for could save you thousands of pounds, says Kalpana Fitzpatrick
By Kalpana Fitzpatrick
-
Can Donald Trump fire Jay Powell – and what do his threats mean for investors?
Donald Trump has been vocal in his criticism of Jerome "Jay" Powell, chairman of the Federal Reserve. What do his threats to fire him mean for markets and investors?
By Katie Williams
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocks
Opinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
By Cris Sholto Heaton
-
BP's 'long, painful decline' – and why next year could be even tougher
Opinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
By Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global markets
Opinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
By Peter Walls
-
Falling revenues and mounting debt spell trouble for Jumia Technologies
Struggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
By Dr Matthew Partridge
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?
Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
By Dr Matthew Partridge
-
Best of British bargains: cash in on undervalued companies in the UK stock market
Opinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
By Michael Field
-
Building firm Keller presents low debt and ample scope for growth
Geotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
By Dr Mike Tubbs
-
PZ Cussons share price down 75% in last decade – why it's one to watch
Opinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
By Jamie Ward