Intel Corp.’s (NASDAQ: INTC) Q4 2024 report was disappointing, with revenue growth slowing, sales in key segments declining, and the company lagging behind competitors in advanced technology. The Q1 2025 forecast suggests ongoing challenges. As a result, the company’s shares are trading near a 10-year low.
The article examines Intel’s stock performance, the reasons behind its decline, and whether it presents a buying opportunity. It includes a fundamental analysis of Intel’s financial report and a technical analysis of INTC shares, forming the basis for Intel’s 2025 stock forecast.
About Intel Corp.
Intel Corp. is a US technology company specialising in developing and producing microprocessors, chipsets, GPUs, systems-on-a-chip (SoC), network controllers, modems, flash memory, Wi-Fi and Bluetooth chipsets, and sensors for vehicle automation. Founded in 1968 by Gordon Moore and Robert Noyce, Intel introduced the world’s first microprocessor in 1971, laying the groundwork for its future success.
In the same year, Intel held its initial public offering (IPO) on the NASDAQ under the ticker symbol INTC, becoming one of the first companies in the emerging technology sector.
Challenging times for Intel: dot-com bubble, the pandemic, and competitive struggles
The company faced its first major setback during the dot-com bubble in 2000, as demand for PCs and servers plummeted. Management increased production, leading to an oversupply and falling prices, not predicting the downturn. As a result, Intel was compelled to scale back production, cut costs, and develop a recovery program. Following the crisis, the technology market rebounded, reviving demand for Intel’s products and helping the company recover from the downturn.
The next major test came in 2021. A surge in demand for semiconductor products during the COVID-19 pandemic in 2020 drove increased production, leading to market oversaturation and a subsequent drop in prices, which, in turn, hit Intel’s revenue. However, the company’s challenges did not end there.
In 2023, Intel faced fierce competition from AMD and NVIDIA, whose products outperformed Intel’s processors and graphics solutions in both performance and energy efficiency. A key factor behind this loss of competitiveness was the previous management’s focus on business strategy and financial performance at the expense of engineering investment, leading to delays in transitioning to more advanced 7- and 5-nanometre technologies – already mastered by Taiwan Semiconductor Manufacturing Company (NYSE: TSM), which produces chips for NVIDIA and AMD.
Investors’ reaction to the company’s difficulties was obvious – they sold off Intel shares. During the 2000 dot-com crisis, the company’s stock plunged by 82%. The current situation is similar, with the stock losing 70% of its value between its peak in April 2021 and November 2024.
Intel is increasing investments in new factories and equipment upgrades for foundry operations to restore investor confidence and defend its market share. This strategy temporarily reduces profitability (the company ended 2024 with a loss). To reduce costs, Intel’s management plans to lay off up to 15% of its workforce.
Intel Corp.’s Q3 2024 report
Intel released its Q3 2024 report on 31 October, revealing the following key financial indicators:
- Revenue: 13.3 billion USD (-6%)
- Net income (loss): 2.0 billion USD compared to 1.7 billion in Q3 2023
- Earnings (loss) per share: 0.46 USD compared to 0.41 USD in Q3 2023
- Gross Margin: 18.0% (-2,780 basis points)
Revenue by segment:
- Client Computing Group: 7.3 billion USD (-7%)
- Data Center and AI: 3.3 billion USD (+9%)
- Network and Edge: 1.5 billion USD (+4%)
- Intel Foundry: 4.4 billion USD (-8%)
- All other: 1.0 billion USD (-28%)
In her comments on the report, Intel’s CEO, Pat Gelsinger, noted that the company’s profitability was impacted by expenses previously mentioned during the Q2 2024 results discussion. However, the actual results exceeded expectations. In Q3, Intel took significant steps to reduce costs, improve efficiency, and strengthen its market competitiveness. A significant part of the workforce reduction program was also implemented, with plans to lay off an additional 15% of employees by the end of 2024.
The financial results were also impacted by write-offs of outdated products from the COVID-19 period, as these could not be integrated into current products.
Looking ahead to Q4 2024, management is optimistic. Projected revenue is expected to be between 13.3 and 14.3 billion USD, with adjusted EPS at 0.12 USD, indicating that profitability is achievable.
Despite the current losses, Intel is encouraging shareholders to retain their shares and has paid a Q3 dividend of 0.12 USD per share.
Intel Corp.’s Q4 2024 report
On 30 January, Intel published its Q4 2024 report with the following key figures:
- Revenue: 14.3 billion USD (-7%)
- Net income (loss): 126 million USD compared to income of 2.7 billion in Q4 2023
- Earnings (loss) per share: 0.03 USD compared to earnings of 0.63 USD in Q4 2023
- Gross margin: 32.9% (-650 basis points)
Revenue by segment:
- Client Computing Group: 8.0 billion USD (-9%)
- Data Center and AI: 3.4 billion USD (-3%)
- Network and Edge: 1.6 billion USD (+10%)
- Intel Foundry: 4.5 billion USD (-13%)
- All other: 1.0 billion USD (-20%)
For Q1 2025, Intel expects revenue to range between 11.7 and 12.7 billion USD, with a loss per share of 0.27 USD. Gross margin is projected to be 36%, down from 51% in Q1 2024.
Q4 2024 was the first financial quarter under interim co-CEOs David Zinsner and Michelle Johnston Holthaus following Pat Gelsinger’s resignation. Michelle Holthaus noted that the last quarter represented a positive step forward, as Intel exceeded its revenue, gross margin, and EPS guidance. She emphasised the progress in implementing the cost reduction plan to improve the company’s trajectory. David Zinsner stated that the plan is already making an impact by enhancing the efficiency of the entire business, leading to greater returns on invested capital and overall profitability.
Intel continues to move towards its foundry model by establishing Intel Foundry as an independent subsidiary. For Q1 2025, the revenue from this division is expected to be at the same level as Q4 2024.
Despite positive elements in the company’s report, market participants responded negatively to its release due to the expected future decline in Intel’s revenue.
Expert forecasts for Intel Corp.’s stock for 2025
- Barchart: out of 37 analysts, one rated Intel Corp.’s stock as Strong Buy, 30 as Hold, one as Sell, and five as Strong Sell. The high price target is 62 USD, while the low price target is 19 USD
- MarketBeat: out of 32 specialists, one assigned a Buy rating to the stock, 27 gave a Hold recommendation, and four advised Sell. The high price target is 62 USD, while the low price target is 20 USD
- TipRanks: out of 30 professionals, one gave a Buy recommendation, 25 advised Hold, and four gave a Sell rating. The high price target is 28 USD, while the low price target is 18 USD
- Stock Analysis: out of 31 experts, one rated the shares as Buy, 26 as Hold, two as Sell, and two as Strong Sell, with an average price target of 20 USD. The high price target is 40 USD
On the weekly timeframe, Intel stock is trading within a descending channel and is approaching the channel’s lower line, which serves as a support level. Additionally, convergence formed on the MACD indicator, signalling potential growth. Based on Intel’s stock performance, the possible price movements for 2025 are as follows:
The primary forecast for Intel stock suggests a decline to the 15 USD support level, followed by a rebound and growth to the 30 USD resistance level. A breakout above this level could drive the stock price up to the trendline at 37 USD. This scenario appears the most likely, as the company has issued a weak forecast for Q1 2025 and has new management, which will face the challenging task of reviving Intel.
The optimistic forecast for Intel stock suggests growth from the current level of 19 USD to the 30 USD resistance level. A breakout above this level could function as a catalyst for further price growth to 40 USD.
Intel Corp.’s stock analysis and forecast for 2025
China’s antitrust investigation into Intel
China is considering an antitrust probe into Intel, one of the US tech companies under scrutiny amid the escalating trade conflict with the US. While the specifics of the upcoming investigation remain unclear, it could be linked to Intel’s dominant position in the Chinese processor market, which is the company’s largest revenue-generating business segment.
All this seems to be just the beginning of a broader global scrutiny, with Chinese regulators also targeting other US tech giants, such as Alphabet (NASDAQ: GOOG) and NVIDIA (NASDAQ: NVDA).
Risks of investing in Intel Corp.’s stock
When investing in Intel Corp.’s stock, it is necessary to consider factors that could negatively affect the company’s future revenue. The key factors are outlined below:
- Manufacturing challenges: Intel is experiencing challenges in manufacturing its products, particularly as it transitions to more advanced microtechnologies. Delays in adopting new practices and overspending on manufacturing projects may lead to higher costs without a corresponding increase in revenue
- Contract business challenges: Intel’s ambition to become the second-largest contract chipmaker by 2030 faces challenges in attracting clients, intense competition from Samsung and TSMC, and risks associated with this partnership model, which requires significant investments with no guarantee of a return
- Loss of market share and competition: Intel’s traditional dominance in the PC market is diminishing due to reduced demand for these devices. Competition from ARM processors, particularly in mobile devices, servers, and data centres, threatens Intel’s income
- AI and data centre market: Intel is notably lagging in the AI chip industry, where NVIDIA has a significant competitive edge. This has resulted in a loss of market share, particularly in the data centre segment, which is crucial for generating high-margin revenue
- Financial standing and investments: Intel reported negative EPS again, indicating financial difficulties. This situation could undermine investor confidence and affect the outlook for funding research and development necessary for further growth
- Suspended dividend payouts: the suspension of dividends, which had been in place since 1992, may discourage investors focused on stable income. Such financial restrictions could erode investor confidence and ultimately push the stock lower
- Geopolitical and economic factors: tensions between the US and China, a key semiconductor market, could negatively impact Intel’s business in this area. Additionally, the company’s global manufacturing presence is subject to serious geopolitical risks for several reasons
These factors collectively threaten Intel’s future earnings, potentially leading to a decline in revenue and higher unplanned expenses.
Summary
Intel’s Q4 2024 report highlighted both successes and challenges in the highly competitive semiconductor market. The company has reduced losses and continues to develop solutions for data centres, which opens the door for growth. Investments in 7 and 5 nm technologies provide the company with prospects to upgrade production facilities and effectively compete with market leaders. The development of the foundry business is also gaining momentum, allowing Intel to manufacture chips for external clients and reduce its reliance on its proprietary branded products.
Nevertheless, competition with AMD and NVIDIA remains intense, particularly in the GPU segment. Intel’s transition to AI chips faces fierce competition, with the ability to adapt to changes in this area becoming a crucial factor for the company. Additionally, with a change in management and a shift to new strategies, the company must successfully implement this transformation to ensure that conditions for its growth are in place.
Although Intel Corp. has promising prospects, it must overcome competition and accelerate innovation in AI, manufacturing technologies, and the foundry segment. As a result, Intel faces challenging times ahead.
Source: Roboforex
