Where Will Intel Stock Be in 3 Years?

Leo Sun, The Motley Fool

Fri, Apr 11, 2025, 1:14 AM 5 min read

Intel (NASDAQ: INTC), the world's largest shaper of x86 CPUs for PCs and servers, was erstwhile considered a reliable bluish spot tech stock. It had a wide moat, generated unchangeable profits, and paid retired reliable dividends.

But implicit the past decade, that moat evaporated, its marketplace stock shriveled, and its profits plunged. It yet suspended its dividend past year, and it's present being led by its 4th CEO successful conscionable 7 years. That's wherefore Intel's banal has declined astir 60% implicit the past 3 years.

But could that pullback correspond a bully buying accidental for investors who program to clasp it for astatine slightest different 3 years? Let's reappraisal its biggest challenges to find out.

Intel is an integrated instrumentality shaper (IDM) that designs, manufactures, and sells astir of its ain chips. That capital-intensive concern exemplary sets it isolated from "fabless" chipmakers similar Advanced Micro Devices and Nvidia, which outsource their manufacturing to third-party spot foundries similar Taiwan Semiconductor Manufacturing (TSMC) and Samsung.

Intel's foundries erstwhile produced the world's smallest and densest chips. But alternatively of ramping up its R&D spending to support its pb successful the "process race," it squandered excessively overmuch of its currency connected clumsy acquisitions, wasteful buybacks, and large dividends.

As a result, Intel struggled with spot shortages and persistent delays arsenic TSMC pulled up successful the process contention with a unchangeable proviso of much precocious chips. AMD, which redesigned its chips and outsourced its accumulation to TSMC, past drew distant Intel's PC customers with cheaper and much power-efficient chips. According to PassMark Software, Intel's year-end stock of the x86 CPU marketplace shrank from 82.2% successful 2016 to 58.9% successful 2024. AMD's stock during that clip much than doubled from 17.8% to 38.4%.

As Intel mislaid its halfway market, it missed the seismic displacement toward artificial quality (AI) chips -- a booming marketplace that Nvidia conquered with its high-end GPUs for information centers. Nvidia besides replaced Intel successful the Dow Jones Industrial Average past November.

As Intel struggled with its existential crisis, it endured abrupt strategical shifts nether 3 CEOs. Brian Krzanich, who led Intel from 2013 to 2018, "di-worsified" Intel's concern with excessively galore acquisitions. Successor Bob Swan divested immoderate of those noncore businesses, aggressively chopped costs, and adjacent considered turning Intel into a fabless chipmaker earlier helium was ousted successful aboriginal 2021.

Pat Gelsinger past doubled down connected upgrading Intel's fabs to drawback up to TSMC, but those efforts relied heavy connected authorities subsidies and didn't impressment excessively galore investors earlier his dismissal past December.