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
-
Are cash ISAs falling out of favour?
Cash ISA openings are trailing those of stocks and shares ISAs, new research shows, suggesting investors are front-running potential government reform
By Dan McEvoy Published
-
Money tips for the end of the tax year
The tax year will end on 5 April, and your annual allowances for 2024/25 will disappear with it. Here’s how to get your finances in shape
By Katie Williams Last updated
-
India's stock market decline wipes out $1.3 trillion in market value – can investors stay optimistic?
More than $1 trillion has been wiped off from India's stock market after investors turn to China. Has the emerging-market darling hit rock bottom?
By Alex Rankine Published
-
Pensions revolution: how to profit from the trends shaping the UK pension system
The UK pension system is one of the biggest in the world. Big changes are under way, says Rupert Hargreaves
By Rupert Hargreaves Published
-
Will Trump force the Fed to lower interest rates?
Opinion Markets are ignoring the risk that Donald Trump forces the central bank into reckless interest rate cuts
By Cris Sholto Heaton Published
-
Large cap stocks start to struggle – is it time for investors to reassess their focus?
Buying quality large caps worked very well last decade. A more volatile world will be a bigger challenge for these star stocks, says Cris Sholto Heaton
By Cris Sholto Heaton Published
-
How to generate income with fixed-interest investments
Public debt is overvalued, but other fixed-interest investments now look like a bargain, says Max King
By Max King Published
-
Three top-notch Taiwanese companies cashing in on the advent of AI
Opinion Eric Chan, investment director and co-manager of the Aberdeen Asian Income Fund, highlights three potential Taiwanese winners in the technology industry
By Eric Chan Published
-
Weight-loss drugs could revolutionise the economy – the investments to buy now
The new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
By Dr Matthew Partridge Published
-
Find tomorrow’s Asian giants while they are still smaller companies
Opinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
By Nitin Bajaj Published