Intel (NASDAQ:INTC) may capitalize on the generative AI trend, but Intel stock has moved the other way so far this year. It’s uncertain if the chip maker will find success in producing AI-compatible chips for the PC market.
Add in other risks, and there may not be enough in play to counter the key issue that weighs on shares. With this, forget about any sort of “fear of missing out” with INTC. The big fear here is the fear of getting stuck holding the bag.
Intel Stock: Bouncing Back But Still Trending Lower
During March and April, INTC experienced a steady slide in price, from around $45 to around $30 per share. The general sell-off in AI stocks during this time of course played a role in this. However, his big decline was in large part due to some discouraging news out of the company.
First, in early April, Intel admitted that its turnaround, which relies heavily on the company becoming a major chip foundry, will not really start to play out until later this decade.
Second, later in them month, Intel released its latest quarterly results. While beating on earnings, Intel’s revenue for the quarter fell short of consensus estimates.
Worse yet, the company provided very underwhelming guidance for the current quarter. Focusing on this major negative, investors bid down Intel stock in response. Yes, since the April 25 earnings release, shares have bounced back, albeit slightly.
Investors have reacted positively to the latest news regarding Intel’s global buildout of its chip manufacturing capacity. However, while inching higher in the short-term, INTC remains on a long-term downward trajectory.
It may be able to hold at or near present price levels for now, but not for long.
Why the Dust has Not Necessarily Settled
With Intel stock finding support at $30 per share, it may seem as though it has finally bottomed out, and that a rebound will continue. After all, take a look at 2025 earnings forecasts.
The sell-side expects Intel’s earnings to nearly double next year, from $1.10 per share to $2.01 per share. This consensus forecast suggests that AI-PC growth will help mitigate the impact of the foundry buildout. However, these forecasts may overly aggressive.
As mentioned above, while Intel may be moving aggressively into the AI-PC chip market, Intel’s success in this market could fall short of expectations. Why? Competition, and not only competition from the likes of its more cutting edge direct competitors. As we pointed out in a prior article on Intel, Apple’s (NASDAQ:AAPL) AI-PC chips, designed in-house, could give competing chips a run for their money.
If underwhelming success in AI-PC chips is coupled with, say, further headwinds stemming from the U.S.-China trade war, it may prove difficult for 2025 results to meet expectations. In the event this scenario becomes more likely to play out, the market could do yet another downward revision to INTC’s valuation.
The Verdict: More Declines Remain Very Possible
Following the sell-off, investors are no longer pricing-in the foundry catalyst so strongly, but the AI-PC chips catalyst remains well baked into the valuation. In the months ahead, this could change, driving Intel down back to its multi-year lows in the mid-$20s per share.
Alongside downside risk in the short run, is the risk of subpar returns in the long-run. Given how long its going to take for Intel to possibly make a full exit out of its slump, shares could underperform peers in a big way over the next few years.
Whether you bought in before its short-lived late 2023 hot run, or if you’ve “bought the dip” in recent months, we reiterate that there’s little need to maintain an Intel stock position right now.
Intel earns a D rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.