Give chip stock Intel (INTC) credit; it at least knows how far it has fallen. In fact, Lip-Bu Tan himself recently addressed employees—the ones who have not yet been laid off—and delivered some hard truths to the assembly. Perhaps the hardest blow came when Tan admitted “We are not in the top 10 semiconductor companies.” But this humility hit home for Intel shareholders, who sent shares up over 2% in Thursday afternoon’s trading.
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While speaking to employees in a broadcast sent to Intel’s employees worldwide, Tan noted that “Twenty, 30 years ago, we are really the leader. Now I think the world has changed. We are not in the top 10 semiconductor companies.” Worse, Tan noted, Intel products are falling flat with consumers, which opens up the floodgates for a panoply of competitors to swoop in and take that market share for themselves.
But Tan was not taking this lying down. He declared that Intel’s turnaround would be a “marathon,” and that Intel would “…have to be humble,” here referring to the need to be more open to customer opinion and meeting their needs. Intel reps launched damage control efforts shortly after, noting that Tan was referring to market value as opposed to “technological leadership” when he mentioned no longer being in the top 10.
It Got Worse From There
As galling as it had to be for Tan to admit Intel’s position in the market had slid, he followed that up by pretty much abandoning any hope of catching up to Nvidia (NVDA) or the other competitors in the field as far as artificial intelligence was concerned.
While artificial intelligence has been around for quite some time, it was the appearance of ChatGPT that started what some called a “second big bang.” The problem, however, was that that particular big bang traced its genesis back to Nvidia graphics processing units (GPUs), not any kind of Intel hardware. And while Intel has made some strides since—and has some irons in the fire going forward—the end result is still a company that is clearly on the back foot.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 27 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 30.03% loss in its share price over the past year, the average INTC price target of $21.40 per share implies 10.44% downside risk.
