Intel in Upheaval: Analysts Pessimistic – Competitors Brimming with Strength

The future of Intel is shrouded in uncertainty, as the semiconductor giant's stock hovers near historic lows. Amid these challenging times, Toshiya Hari, an analyst at Goldman Sachs, forecasts an 'uphill battle' for Intel to compete with rivals such as Nvidia, AMD, and Taiwan Semiconductor. At the Goldman Sachs Communacopia & Technology Conference on Monday, Hari rated Intel shares with a 'Sell.' He believes that Intel will need time to catch up with more powerful competitors, particularly in AI chip technology – if it can even manage to do so. Goldman's pessimistic view of Intel, while Nvidia stands on the highly regarded Conviction Buy List, hits the company at a delicate phase. In the second quarter, Intel significantly missed analysts' estimates for revenue, gross margin, and profit, as the company faced tougher market conditions and unexpectedly high costs to scale AI chip production. A drastic measure was the suspension of the quarterly dividend, which will take effect in the fourth quarter. Intel, which had previously paid dividends for 125 consecutive quarters, still paid $3.1 billion to its shareholders in 2023 alone. Additionally, the company plans to cut 15% of its workforce to reduce costs. Pat Gelsinger, Intel's CEO, emphasizes the long-term orientation of his actions despite disappointing quarterly results and outlooks. The CEO describes the current restructuring as the largest since the decision to focus on microprocessors four decades ago. Gelsinger is also considering a possible IPO for the chip division Altera and the sale of the foundry business to strengthen investor confidence. Intel's stock has lost about 50% of its value over the past year, while Nvidia and AMD gained 132% and 30%, respectively. JPMorgan analyst Harlan Sur remains critical of Intel's stock, rating it as 'Underweight' (equivalent to 'Sell'). He notes that the company faces significant macroeconomic challenges and a highly competitive environment and still needs time to build confidence in its technology and diversification strategies. A beacon of hope for investors: In the Yahoo Finance podcast 'Opening Bid,' EMJ Capital founder and tech investor Eric Jackson argues for a doubling of Nvidia's stock price. More on this can be found on common streaming platforms or directly on Yahoo Finance.