In the past two years, Intel (NASDAQ:) investors had little to cheer about as smaller competitors took advantage of the company's manufacturing flaws and captured significant market share.
Intel's stock price chart shows this failure very clearly. The California-based chipmaker fell about 7.5% during that period, while the benchmark more than doubled.
INTC week card
The company's disappointing growth and manufacturing errors allowed competitors to achieve significant market penetration by bringing their most advanced chips to customers. NVIDIA (NASDAQ:), for example, gained more than 300% during that period, while Advanced Micro Devices (NASDAQ:) – a company that struggled just a few years ago – rose about 200%.
However, at the start of the new year, Intel offers a glimmer of hope. The first signs are that the turnaround under new CEO, Pat Gelsinger, is on the right track.
During last week's CES in Las Vegas, which is considered one of the most influential tech events, Intel executives announced a new line of chips in an effort to put the company back at the top of the game. computer processors. The so-called 12th generation Intel Core mobile processor line, which includes 28 new models, is as much as 40% faster than its predecessors.
In addition, top PC makers, such as Dell Technologies (NYSE:) and HP (NYSE:), have already indicated that they intend to use the new line of processors in future machines that targeting gamers.
, the California-based chipmaker is also from plans to list its self-driving car unit, Mobileye this year, targeting a valuation of approximately $50 billion.
Mobileye specializes in chip-based camera systems that enable automated driving functions in cars. Intel would retain majority stake in Mobileye, while allowing independent management of the current team of the self-driving car.
A valuation of $50 billion would be a hefty return for a company acquired in 2017 for approximately $15 billion. Despite these positive developments, most analysts following Intel's stock remain skeptical. Among the 45 analysts surveyed by Investing.comthe general consensus is neutral, with 23 respondents giving the stock a neutral rating, 13 staying a buy and 9 giving a sell rating.
KeyBanc in a recent note downgraded Intel from overweight to sector weight, saying it sees limited catalysts in the near term. The note read:
"While INTC has an analyst event in February, we are skeptical that any announcement could change the bearish narrative about the stock. Given all the missteps of recent years, we believe investors are waiting for demonstrable evidence."
Another test to show whether the company is cornering under Gelsinger's leadership comes later this month when Intel reports its full annual report. The company's last three quarterly reports failed to impress investors as they remain concerned about the high costs of these initiatives and their impact on earnings.
Outlining his plan to analysts in March, Gelsinger said Intel will rely more on third-party manufacturers from 2023 to produce some of its most advanced processors. He also announced a $20 billion investment to build two new chip manufacturing facilities in Arizona called Intel Foundry Services (IFS), which will make chips designed by other companies. ]Intel looks set to gain traction in the new year, with its share up about 8%. But this doesn't mean the company has suddenly become a better choice in the semiconductor industry, where other high-growth players offer a much better opportunity for capital appreciation. We continue to recommend a wait and see approach when it comes to buying Intel stock.