For Intel (NASDAQ:INTC), 2024 has been nothing short of disastrous. Once a Silicon Valley pioneer, the company now finds itself on the sidelines, watching as its competitors soar on AI-driven growth, while its own stock has plummeted by 60% this year.
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Intel has missed dividend payments, is laying off some 15% of its workforce, and is reportedly shopping around the foundry business in an attempt to turn its fortunes around.
Now, adding insult to injury, the Dow Jones Industrial Average is considering removing the tech company from the flagship index.
Is this yet another red flag in a year already riddled with setbacks? According to one investor, known by the pseudonym Invest Heroes, this move may not be the existential threat it appears to be.
“The actual negative effect of the company’s exclusion from the DJIA will amount to slightly more than $100 million (out of Intel’s current capitalization of $80.60 billion),” writes the investor.
Invest Heroes explains that INTC only makes up about 0.3% of the Dow Jones, which translates to less than 0.15% of Intel’s total capitalization. Therefore, the impact of any subsequent outflows from the delisting will be fairly minimal.
Looking at the company’s operations, Invest Heroes sees a number of reasons for optimism, including Intel’s focus on building out its Core Ultra AI processors. According to the investor, such a move demonstrates a commitment to “long-term growth rather than short-term benefits.”
Of course, Invest Heroes is not blind to the difficulties that Intel has been facing. Nonetheless, the investor still anticipates Intel will return to profitability, projecting a net income of $2 billion by 2025.
“The company intends to overcome operational difficulties, is striving to strengthen its position in all segments of its market presence,” writes Invest Heroes.
The negative sentiment in the market could serve as an opportunity for investors to snap up Intel at bargain prices, adds the investor, who rates Intel shares a Buy. (To watch Invest Heroes’ track record, click here)
Wall Street, however, remains more cautious. The 33 analyst ratings over the past three months break down into just 1 Buy, 26 Hold, and 6 Sell ratings, making Intel a consensus Hold (i.e. Neutral). However, the average 12-month price target of $26.09 suggests a potential upside of ~33%, indicating some analysts believe Intel could turn things around. (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.
