So not long ago, chip stock Intel (INTC) took a lawsuit from shareholders about Intel’s foundry business, and the huge amount of losses that it inspired. But a judge was not particularly interested in hearing said case, and as such, dismissed it. That should have been good news for Intel, but regardless, shareholders rushed for the exits, taking nearly 4% of share value with them in Wednesday afternoon’s trading.
The case came before U.S. District Judge Trina Thompson, who considered the case that Intel simply took too long in letting shareholders know that fiscal 2023 saw an operating loss of around $7 billion, mostly connected to the foundry processes. Intel did not disclose the losses until April, following a change in its accounting processes and financial results reporting.
Thompson in turn dismissed the suit, noting that the shareholders were not actually misled. Rather, it was the shareholders themselves who “…incorrectly attributed the $7 billion loss to the Intel Foundry Services business unit…”. Further, former CEO Pat Gelsinger’s remarks about “growing demand” were also not misleading, because they focused on certain customers rather than the overall unit itself.
Hitting the Digital Audit Trail
Meanwhile, that same foundry unit may benefit from a new practice at Intel, a newly-minted “digital audit trail.” The trail will allow customers to see how their chips go through Intel’s internal development processes before ultimately reaching their PCs. Known as the Assured Supply Chain program, this system allows users to follow a chip through production cycles, and distribution networks.
While some might think this is just an unnecessary nice-to-have feature that few will actually use, its primary target market of “…government, highly-regulated industry, and enterprise customers who really desire transparency…” may find it much more welcome. Appealing to that market, meanwhile, may mean substantial benefit in sales as this market finds its concerns more understood than at Intel’s competitors.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 25 Holds and five Sells assigned in the past three months, as indicated by the graphic below. After a 53.46% loss in its share price over the past year, the average INTC price target of $22.69 per share implies 10.74% upside potential.
