Intel's poor stock performance could lead to its removal from the Dow Jones

[zohaibahd]

What a downfall: Back in the late 90s, Intel and Microsoft were the first major tech players to join the elite Dow Jones Industrial Average club. It was the heyday of the PC revolution that these two giants had largely ushered in. But the tides have turned over the last couple of decades. While Microsoft has soared to become the world's second-biggest company thanks to its booming cloud and AI businesses, Intel has been struggling.

The chipmaker's market cap has now dipped below $100 billion for the first time since its peak in 2000. Its stock has plummeted nearly 60% this year alone, making it the worst performer among the 30 Dow components that make up the DJIA. The company also reported a $1.6 billion loss for the second quarter, causing shares to sink even further to their current $20 level.

With such a low stock price and a mere 0.32% weighted influence in the DJIA, analysts in a Reuters report are sounding the alarm that Intel's days in the index could be numbered.

The Dow's selection committee keeps a close eye on the spread between its highest and lowest-priced components. When that gap exceeds 10x, they've historically given the bottom dweller the boot. Right now, healthcare behemoth UnitedHealth Group's lofty $580 share price is a whopping 29 times more expensive than Intel's.

A few key missteps have contributed to this downfall, starting with the fact it failed to ride the AI wave. The company has also been bleeding market share in its bread-and-butter data center CPU business, and its massive investments in new manufacturing capacity look questionable given the cloudy prospects for its foundry efforts. In fact, an upcoming $32 billion factory in Germany, which is already facing delays, could be outright canceled.

In an attempt to stop the bleeding, Intel has resorted to laying off 15% of its workforce and suspending its dividend payouts. The company is also considering the separation of its business divisions into independent entities.

If Intel does get kicked out of the Dow, the report says two leading candidates to replace the company are semiconductor rivals Nvidia and Texas Instruments.

Nvidia has had an excellent year (up until yesterday), with its stock rocketing 160% higher as the AI boom turbo-charged demand for its graphics processors. However, its extreme volatility could give the Dow's conservative selection committee some pause. Texas Instruments might therefore be the safer choice. Known for its steady performance and major US manufacturing footprint, it has delivered a relatively calm 20% stock gain this year.

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Intel's poor stock performance could lead to its removal from the Dow Jones

 

[Axeia]

Intels failures over the years:
* Not getting a foothold in the mobile market and withdrawing from it, giving ARM free reign (surely that won't bite them in the ***)
* Sitting on their hands releasing quad core after quad core for years giving AMD the opportunity to rise (Ryzen) up.
* Failing on the fab front where they had always been ahead, TSMC caught up and eventually pulled ahead.
* Losing Apple as a customer who switches over to an ARM design (whoops, should have held on to that mobile market). It's not about the market share - it's about sending a message. The message is that Intel fell too far behind and some figured they could do better themselves (and they did, which is real bad for the publics opinion on intel)
* Missing the boat on AI. Whilst NVIDIA is making boat loads of money Intel is just fighting for scraps.
* Pushing 13th and 14th Gen too far to compete with AMD. The fallout from that hurt the publics opinion once again but far worse... It's costing them datacenter customers. Those who hadn't switched over to AMD yet are doing so now. These are the super loyal customers that never really want to switch over and unless. AMD screws up in similar fashion those customers are lost forever (and that is the fast margins market).


Intel is definitely in hot water.I wouldn't be surprised if they'll end up having to split off the fabs. The US government won't be willing to lose that branch so it's basically safe from going completely under. An endless supply of US tax payer money will keep the fabs afloat. The other branch however isn't quite as vital on the world stage. The other x86 player is American as well after all, Qualcomm AMD Apple are US based as well.

 

[Watzupken]

I have a strong feeling the US government will prop Intel up because they want more chip making to be onshored. But this will be a very costly bailout because foundries are very costly to maintain and very dependent on a healthy demand pipeline to keep it funded.

 

[Subset6]

Welp, its not looking good for discrete Intel GPU's anymore sadly. Looks like we'll have to settle for the duopoly of AMD/Nvidia for a long while to come.

 

[antiproduct]

I feel like I'd have more sympathy for Intel in this moment if they weren't such jerks when they did have the money and power. I guess their marketing and PR departments have really been running them for too long now.

 

[Theinsanegamer]

Welp, its not looking good for discrete Intel GPU's anymore sadly. Looks like we'll have to settle for the duopoly of AMD/Nvidia for a long while to come.

I never understood why they made them on TSMC and not their own node. It'd make a lot more sense to keep it in house and at lower clock speeds Intel can be remarkably efficient. Also they REALLY needed to hammer the drivers out faster.

 

[Alsotrue]

I believe Intel can turn around. The’re on the EUV train now, new products are looking competitive and they still have enormous assets (cash, fabs, distribution networks, etc.)

 

[redgarl]

I have a strong feeling the US government will prop Intel up because they want more chip making to be onshored. But this will be a very costly bailout because foundries are very costly to maintain and very dependent on a healthy demand pipeline to keep it funded.

If they were providing anything meaningful, maybe, but they are not.

 

[pcnthuziast]

Begging of the end. Once a Goliath, Intel's days are numbered.

 

[WhiteLeaff]

I think Intel should focus on CPUs and Fabs if possible. Everything else tends to be loss-making

 

[Endymio]

The DJIA selection committee isn't going to remove Intel without replacing it with another semi firm. NVidia would be the logical choice, but it may be considered too new and volatile for the committee. We'll see.

Begging of the end. Once a Goliath, Intel's days are numbered.

Sure. Five digits numbers are technically still numbers, right?

 

[NumberNine]

It's fine, they're too big to fail and will continue to thrive under corporate welfare measures.

People with money to play with will make a fortune on the stock recovery. If the government is shoveling my tax dollars into something anyways I may as well attempt to benefit myself.

 

[Starfals]

Nobody thought this was possible. Intel was too huge... and here we are. I wonder if a similar thing could happen to Nvidia in 5-30 years. It is very interesting.

 

[Tekpot]

Naming their CPUs "Lake" is simply a bad idea. LOL

 

[p51d007]

The problem with Intel is sadly what happens to a LOT of companies that "rest on their laurels"
You don't see Sears, Wards, Zenith, K-Mart, and on and on.

Why? They failed to look into the future, betting on "oh, we've been here forever, people will still buy us"
Sometimes, when a company is #1, they will sit back and hope everyone continues to buy them, but there
is always a competitor that will fight to be better. Intel really had no real competition per se until others
started producing NEW chips, not just faster versions of something already there.
Yes, a lot of times it is the "suits" that screw up a company as well.

 

[BuckarooBonzaii]

I'm sure the suits in Washington will bail them out. If they become a defense contractor like Lockheed, Raytheon, etc. Intel will always have money. They're already working closely with DARPA.

 

[Dr Roboto]

Intel has seriously messed up. Like many others, I want to feel bad for them because competition in the CPU market is important. But I remember back around 2017 when Intel was more than happy to charge consumers exorbitant prices for their CPUs before AMD got their act together.

No company is immune to poor management bringing down a once-great leader (just look at General Electric, Kodak, Nokia, BlackBerry, Compaq, Sun Microsystems, Polaroid, Xerox, etc.). That said, I still have an overclocked 4th-gen Intel i5 CPU that works great today and handles most games just fine paired with a 1070 Ti, so I know Intel is capable of making great products. I have faith they’ll bounce back.

Their current processors are still solid. Let’s not forget AMD’s rough years with Bulldozer and Piledriver before their management overhaul turned things around. I expect Intel will turn things around too—they just need to get their leadership under control before making too many poor decisions, like cutting too much of their tech.

 

[zamroni111]

Intel ai software is actually very good.
the Intel ipex, mkl etc. even works on my 7840u
while the amd software itself doesn't.

amd xdna Linux driver compile fails.
zentorch cannot run.
no rocm for 780m,
etc.

 

[ZedRM]

I haven't taken the Dow-Jones seriously since 2008 when they failed the economy. It's a market I actively avoid because it can't be trusted!

 

[Endymio]

I haven't taken the Dow-Jones seriously since 2008 when they failed the economy. It's a market I actively avoid because it can't be trusted!

The Dow isn't a market; it's a market indicator -- a vast difference. Nor did it "fail" in 2008 ... when the Dow dropped sharply, it certainly was a strongly accurate indicator that economic malaise was imminent.