Intel (INTC) stock price has imploded, leaving the former semiconductor giant into a shell of its former self. Its stock has tumbled to $19.80, its lowest level since May 2024. This drop means that an investor who bought shares worth $100,000 in April 2021 now has just $31,000.

Intel’s fall from grace

For a long time, Intel was the most dominant player in the semiconductor industry. Its Central Processing Unit (CPUs) were in most computers made by companies like Dell, HP, Apple, and Lenovo. 

At the time, its stock was flying high as investors predicted that it would become a bigger player in the tech world. Its first big surge happened at the height of the dot com bubble when it rose to $43.43 in 2000 from less than $10 in 1998.

The past few years have been brutal for Intel. One of its biggest mistakes is that it missed the smartphone revolution by failing to develop these chips. Today, this industry is dominated by Qualcomm, a company valued at over $176 billion, higher than Intel’s $84 billion. 

The company has also had many manufacturing and R&D challenges in the past. For example, it experienced a delay in its 10nm and 7nm chips. There are also signs that the company will delay its 20A and 18A chips, which were scheduled for this year. 

Most recently, the company has suffered a big setback as its 13th and 14th generation chips developed issues that Intel has agreed that they cannot be fixed. 

As a result, Intel has lost its market share in key areas. Apple, a leading computer manufacturer, has shifted from Intel to its independent chips which are doing much better. Unlike Intel’s chips, Apple’s M1, M2, and M3 are more energy-efficient, quiet, and faster. 

Amazon has also launched its semiconductor division, where it is building chips for its large data centers. Other companies like Google and Microsoft are also creating their chips internally. To a large extent, despite Intel’s experience, these firms have built better chips.

Most importantly, gone are the days when Intel chips were in all laptops and desktops. Today, some of the top-selling computers are equipped with Advanced Micro Devices (AMD) chips.

Intel missed the artificial intelligence industry

Intel’s biggest woe has been in its Graphical Processing Unit (GPU) industry. While the company has manufactured GPUs for a long time, benchmark studies show that its products are of a lower quality and performance than those made by Nvidia.

The main reason for this is that Nvidia’s chips perform better in high-load tasks like gaming, Bitcoin mining, professional visualization, and autonomous vehicle industries. To gain market share in the autonomous industry, Intel acquired Mobileye for $15.3 billion and then spun it off into a publicly traded company valued at over $12 billion. 

Nvidia also owns Compute Unified Device Architecture (CUDA), a comprehensive software platform that lets developers repurpose GPUs into industries like AI.

While Intel has launched its AI chips, analysts believe that it is very behind where Nvidia and AMD are today.

Another critical mistake that Intel has made is to commit billions of dollars to build fabrication plants in countries like Germany, Israel, and the United States. Some of these funds are from the respective governments.

I believe that being a fab company will be more complicated for Intel, a company that is known for its bureaucracy and project delays. 

Intel stock crashed after earnings

All these issues led us to the last financial earnings, which showed that the company’s revenue dropped by 1% in the last quarter to $12.8 billion. It also downgraded its forward guidance and it now expects that its Q3 revenue will be between $12.5 billion and $13.5 billion. 

Intel has announced some turnaround measures, including slashing 15% of its workforce and even suspending its dividend in a bid to save cash. 

At times, it makes sense to invest in turnaround stories, as we have seen with General Electric and Chipotle Mexican Grill. 

However, in Intel’s case, the situation will likely get worse in the coming years because its competitors are doing better. 

Intel stock price forecast

(Click on image to enlarge)

The daily chart shows that the INTC share price has been in a strong downtrend in the past few months. It has crumbled from a high of $50.88 in January to below $20. Most recently, it has moved below the key support at $23.64, its lowest point in October 2022. 

The stock formed a death cross as the 200-day and 50-day Exponential Moving Averages (EMA) crossed each other. Also, oscillators have dropped below the oversold levels, meaning that bears have momentum.

Therefore, the Intel share price will likely continue falling in the next few months as sellers target the support at $15. As such, while some analysts are recommending buying when there is blood in the streets, I suspect that it will have more downside. 

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