Decision Week Approaches for Distinguished US Stock
In 2022, Intel faced some tough times and was almost declared extinct by market experts. Can this tech giant make a comeback in the coming days?
Intel stumbled hard in the market last year, mainly due to persistent gossip that the company is lagging far behind competitors like AMD and Nvidia. But Intel isn't throwing in the towel just yet. They're cutting jobs, exploring new markets, and preparing to IPO their subsidiary Mobileye, all in the hopes of a turnaround. Their new chip generation could be just what the doctor ordered, too.
Crucial Numbers for Intel
Intel's results, due out after market close on Thursday, will be a big deal. It's hoped that these numbers will finally show some progress. The global recession of 2023 will also be closely watched, as Intel's outlook for next year will be crucial.
Updates on various projects, like contract manufacturing and the new factory in Magdeburg, will also play a significant role in analyst calls and other discussions. Some analysts have been a tad skeptical about the feasibility of these plans, especially the German factory, given the high energy costs in that country.
Intel's Dividend Might Be in Jeopardy
It's not just their projects that are under scrutiny. Analysts and investors are also questioning Intel's dividend. If the outlook is poor and free cash flow declines, a reduction or even a humblebrag pause on the payout could happen until Intel gets its crap together. Talk about a red flag for the stock market.
A Closer Look at Intel Stock
Despite the stock's low valuation (P/E ratio of 10), it might be best to keep your hands off it until the latest results are out. Interested investors might consider buying back in once a clear direction for the operational turnaround emerges.
Now, a little off-topic: What's happening with Tesla stock after its latest rally?
By the way, Disclaimer: The author has direct positions in the following financial instruments mentioned in this article, which could gain from the price developments resulting from the article: Intel
Additional Insights:
- Market Reaction: In Q1 2025, Intel's stock saw a rise due to cost-cutting plans but later slumped by about 7% after weak guidance was announced[2]. This response suggests that investors are flowing with caution about Intel's near-term prospects.
- Investor Confidence: Weak financial performance and elevated macroeconomic uncertainty can thin investor confidence, potentially affecting stock prices negatively.
- Foundry Business Challenges: Intel's foundry business continues to face significant challenges, including substantial operating losses[1][5]. Despite a slight revenue increase, the segment remains a burden on profitability.
- Strategic Investments: Intel is pouring money into new technologies like AI and advanced manufacturing processes[3]. While these investments are key to future growth, the returns on investment have yet to show up.
- Leadership Changes and Strategy: The company is now under new leadership, which may point to a strategic shift. However, such changes usually take time to result in operational improvements[2][3].
- Intel's IPO of Mobileye is scheduled for an unspecified date, with the results of the company's Q4 2022 financial performance due out on Thursday.
- If Intel's financial performance does not show progress, there might be concerns about the continuation of their dividend payouts.
- In light of Intel's forthcoming results and the challenges faced by its foundry business, analysts advise investors to wait for a clear direction before buying into the company's stock in 2022.
