No one is doubting the fact that Intel (NASDAQ:INTC) shares have had a rough go of things. We’re talking about a 59% fall year-to-date.
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Adding to the turmoil, Intel’s Q2 results missed on revenues and EPS, while reporting operating losses close to $2 billion. As a result, the company has decided to suspend its dividend payments and lay off 15% of its workforce.
For those who had high hopes that Intel would ride the AI wave like its peers, this outcome is a bitter pill to swallow.
The critical question now is whether Intel can steer itself back on track and capitalize on the AI boom. One previously positive investor, Noah’s Arc Capital Management, is no longer certain.
“Intel’s current trajectory no longer inspires confidence in my opinion,” writes the investor. “Until there is clear evidence of a significant breakthrough in their tech, I am no longer seeing the immediate potential of a bullish story.”
The investor was particularly surprised by the market’s lack of interest in Intel’s AI accelerator chips for both PC and server markets despite high overall demand and competitive pricing.
“We’re witnessing a company struggling to keep pace with industry changes,” the investor notes, flagging a forward revenue growth of -3.18% as a big concern. “As we move forward, the focus will be on how Intel can realign their strategy to address these challenges.”
While admitting that Intel is in “a really bad spot,” Noah’s Arc has not completely given up on the company’s prospects.
“I still think there remains a possibility for a turnaround, albeit a less likely one than before,” writes the investor, who will be paying extremely close attention to Intel’s 3Q performance in the next earnings report.
“The company must show real, tangible, progress in their AI and semiconductor initiatives to regain investor confidence,” writes the investor. “Failure to deliver will further cement their position behind competitors.”
“Time is of the essence,” the investor concludes, downgrading INTC shares from a Strong Buy to a Hold. (To watch Noah’s Arc’s track record, click here)
Shifting our focus to Wall Street, analysts by-and-large hold similar viewpoints. Among the 31 recent ratings, we see 25 Hold recommendations, 5 Sells, and only 1 Buy, leading to an overall consensus of a ‘Hold’ rating. However, there’s a silver lining – Intel’s average 12-month price target of $27.82 suggests a potential upside of ~36%. (See INTC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
