Intel Promises Return to Chip Dominance. Does Anyone Care?
INTC stock has been a long-time laggard and analysts say it is still a "show-me" story at best.

Intel (INTC) stock has been lagging the broader market for more than 20 years, hurt by the rise of nimble competitors, manufacturing delays and the fact that the world's largest semiconductor company missed out on some of the biggest changes in technology of the past couple of decades.
But Intel, a component of the Dow Jones Industrial Average, insists that it's set to turn all that around. The company on Monday affirmed that it remains on target to regain leadership in semiconductor manufacturing.
A multi-year effort to return to the forefront of production technology will allow the firm to reverse market-share losses to competitors such as Advanced Micro Devices (AMD) and Nvidia (NVDA), Intel says. And if that weren't bold enough, Intel even has designs on competing with Taiwan Semiconductor Manufacturing (TSM) in the market for manufacturing chips for other semiconductor companies.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
TSM, incidentally, recently became one of Warren Buffett's top stock picks.
Intel is indeed the world's largest chipmaker, with commanding market shares in central processing units for personal computers (PCs) and data center servers. But its business, as we have been reminded many times over the years, is a slowly melting iceberg. PCs, after all, are in secular decline.
True, data centers are an area of growth in a future increasingly powered by artificial intelligence, but investor interest has shifted to firms that make chips for mobile devices and the Internet of Things. In these endeavors, Intel is an also-ran.
In other words, Intel's current strategy is critical to the stock's long-term success. Bulls contend that if the company is able to deliver on its aspirations, it could provide the catalyst INTC stock needs to shake off its multi-decade run of underwhelming returns.
With that as our backdrop, it's probably at least somewhat disheartening to INTC bulls that Wall Street remains very much on the sidelines on Intel stock. As illustrious and widely held as Intel stock may be, it's a "show me" story at best, analysts say.
Past performance, as we all know too well, is not indicative of future returns, but one look at Intel stock's long-term chart is reason enough to be skeptical about the firm's promises. The chipmaker has tried to reverse its fortunes many times before, and yet INTC stock's track record shows only that investors would have been better served putting their capital elsewhere.
Over the past three years, INTC stock delivered an annualized total return (price plus dividends) of -17.2%. The S&P 500, meanwhile, delivered a three-year annualized total return of 10.4%. At five years, INTC stock's annualized total return stands at -5.1% vs. 10.7% for the broader market.
Things get better when we look back farther, but not by much. Intel stock generated positive annualized total returns over the past 10, 15 and 20 years – but still lagged the broader market by at least 5 percentage points in every one of those periods.
Little wonder, then, that not only does the Street's consensus recommendation on INTC stock stand at Hold, but it's been stuck there for a very long time.
Of the 43 analysts issuing opinions on Intel stock tracked by S&P Global Market Intelligence, seven rate it at Strong Buy, two say Buy, 24 have it at Hold, five call it a Sell and five rate it at Strong Sell. Moreover, Intel stock has held a rating no better than Hold since early 2019.
In other words, analysts as a group haven't been constructive on the name for years. Sadly for bulls, Intel's current strategy hardly has them changing their minds.
Oppenheimer analyst Rick Schafer, who rates shares at Perform (the equivalent of Hold) does a good job summing up Wall Street's lack of enthusiasm for INTC stock.
"Intel remains largely tied to PC growth, and our relatively bearish stance reflects our belief that the PC market has begun a secular decline," Schafer writes in a note to clients. "Intel has stumbled on its technology leadership, falling behind peers as they struggled to transition to 10 nanometer manufacturing."
Susquehanna Financial Group takes an even dimmer view of Intel stock's prospects. Analyst Christopher Rolland, who rates shares at Negative (the equivalent of Sell) downgraded INTC earlier this year from Neutral (Hold). He cites a slew of headwinds, including increased competition in servers and PCs – notably from Apple (AAPL) – as well as a "work-from-home hangover" that's depressing sales of Windows devices.
Rolland further worries about longer-term pressures on Intel as it "moves to more complex, multi-packaged and smaller geometries, and as increased competition pressures pricing."
Intel stock trades at just 14.7 times analysts' 2023 earnings per share (EPS) estimate. That's cheaper than the broader market. But then the Street forecasts Intel's EPS to decline at an average annual pace of more than 11% over the next three to five years.
It's hard to make a bull case on valuation based on that sort of earnings forecast. Most analysts don't even try to.
Warren Buffett has said that the problem with most turnarounds is that they don't turn. Berkshire Hathaway (BRK.B), of which Buffett serves as chairman and CEO, actually owned Intel a decade ago. The stake underperformed and he dumped it in fairly short order.
Something tells us Warren Buffett won't be biting on Intel stock amid the chipmaker's current turnaround efforts either.
Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.
A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.
In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.
-
-
Beware Tax Rules When Donating Stays at Your Vacation Home: Kiplinger Tax Letter
Tax Letter Beware Tax Rules When Donating Stays at Your Vacation Home: Kiplinger Tax Letter Tips
By Joy Taylor • Published
-
A Grandparent’s Guide to Today’s Popular Music
A guide for grandparents to today's popular music, including how to stream music online.
By Steve Hochman • Published
-
For a Concentrated Stock Position, Ask Your Adviser This
There can be advantages to having a lot of stock in one company, but ‘de-risking’ can help avoid some significant disadvantages.
By Robert Gorman • Published
-
Stock Market Today: Stocks Fall After First Republic Bank Suspends Dividend
The embattled lender's dividend cut was just the latest sign of instability in the banking industry.
By Karee Venema • Published
-
Stock Market Today: Stocks Rally on Credit Suisse, First Republic Bank Rescue News
Reports that major U.S. banks would step in to help First Republic Bank helped stocks swing higher Thursday.
By Karee Venema • Published
-
Stock Market Today: Nasdaq Gains as Treasury Yields Collapse
The tech-heavy index swung higher Monday as investors sought out safety in government bonds.
By Karee Venema • Published
-
Stock Market Today: Silicon Valley Bank Failure Sinks Stocks
The largest bank failure since the 2008 financial crisis stole the spotlight from the February jobs report.
By Karee Venema • Published
-
5 Stocks to Sell or Avoid Now
stocks to sell In a difficult market like this, weak positions can get even weaker. Wall Street analysts believe these five stocks should be near the front of your sell list.
By Dan Burrows • Published
-
Stock Market Today: Snap Stock Soars in a Quiet Day for Markets
The major benchmarks made modest moves today, though social media stock Snap soared on TikTok buzz.
By Karee Venema • Published
-
Stock Market Today: Stocks Brush Off Disappointing Tesla Investor Day
The major benchmarks were mixed for most of Wednesday until comments from Atlanta Fed President Raphael Bostic sparked tailwinds for stocks.
By Karee Venema • Published