Why Intel’s Stock Price Is Crashing

Why Intel’s Stock Price Is Crashing

Key Events and Performance

Intel’s stock has plunged 56.14% year-to-date (YTD), with 15.45% of losses occurring last week.

The stock dropped 5.28% in a single day on December 5, and is now trading at $20.92

Factors Behind the Decline

Ongoing Challenges:

Intel has struggled to recover from COVID-19 supply chain disruptions.

Increased competition and a slowdown in the PC market have hurt its performance.

A string of disappointing earnings reports has compounded the company’s challenges.

CEO Departure:

On December 2, Intel announced that CEO Pat Gelsinger had retired abruptly. Reports suggest the board forced him out due to slow progress in turning the company around.

Interim co-CEOs Michelle Johnston Holthaus and David Zinsner are leading the company, but there’s no clear long-term succession plan. Intel is reportedly searching for external candidates to fill the role.

Technology and Strategy Delays:

During a December 4 investor presentation, it was revealed that Intel’s highly-anticipated 18A node technology is behind schedule. Production is now postponed to late 2025, with yields at a low 10%.

No detailed plan for utilizing the $8 billion CHIPS Act funding was presented, raising concerns about Intel’s future strategy.

Market Sentiment

Initial optimism following Gelsinger’s departure quickly faded as investors grew concerned about the company’s lack of a clear turnaround plan.

Analysts have slashed price targets, and insiders are reportedly selling their shares.

Intel’s Competitors

While companies like Nvidia (NVDA) have surged due to the AI boom, Intel has lost significant ground to rivals such as Nvidia, Samsung, and Taiwan Semiconductor Manufacturing.

Future Outlook

Intel has acknowledged the need to shift to a zero-waste production model to improve efficiency. However, with delays in product launches, leadership uncertainty, and competitive pressures, the company faces an uphill battle.

For investors, Intel’s stock is unlikely to recover in the short to medium term, making it a high-risk play except for those with a long-term horizon.