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As Big Tech stocks get slaughtered, Intel rises from the ashes

Mark White by Mark White
January 21, 2022
in Supply Chain
0


Shares are up 3% in 2022 while rivals Nvidia (NVDA) and AMD (AMD) have each fallen more than 10%. Intel is outperforming the rest of the chip industry, too. The iShares Semiconductor (SOXX) exchange-traded fund is down 8% so far this year.
Last week, Gelsinger posted a holiday/New Year’s video message on LinkedIn to brag about recent accomplishments. Wearing an ugly Christmas sweater with Intel’s logo on it, Gelsinger said the company’s new Alder Lake chips for PCs have thrust Intel back into a winning position in the chip world.
“All of a sudden, boom! We are back in the game,” he crowed. “AMD in the rear view mirror…and never again will they be in the windshield, we are just leading the market!” he crowed. Gelsinger spent 30 years at Intel as its first chief technology officer and later senior vice president and general manager before leaving in 2009 to take a job at EMC. (EMC has since merged with VMWare and is now owned by Dell (DELL).)

Intel playing catch up to Nvidia and AMD

AMD, under the leadership of CEO Lisa Su, has gained market share primarily in PC chips at the expense of Intel over the past five years. That’s one of the main reasons why AMD’s stock has soared more than 1,200% since January 2017. Intel’s, meanwhile, has gained just 45% while the iShares Semiconductor ETF has surged 300%.

Nvidia’s stock has also been a much better bet than Intel’s during the past five years, so much so that Nvidia’s market valuation of almost $635 billion is nearly three times Intel’s $219 billion.

And Nvidia has been a leading player, along with AMD, in graphics processing chips, a portion of the market that has grown rapidly thanks to gaming and cryptocurrency mining. Intel is now trying to play catch-up in the graphics chip market, and analysts see some hopeful signs for the company’s upcoming Arc family of processors.

New CEOs are benefiting from a long Wall Street honeymoon

Intel’s weak performance compared to AMD, Nvidia and the rest of the sector, is likely a key reason why former CEO Bob Swan stepped down last year to make way for Gelsinger’s return.

Intel now has more momentum. It recently hired a new chief financial officer from memory chip giant Micron (MU), a move that tech investors applauded.
Traders also liked the December announcement that Intel finally plans to spin off self driving tech unit Mobileye, which it bought in 2017 for $15 billion and is expected to go public with a valuation of about $50 billion.

Wall Street analysts are acknowledging the apparent change in the sector’s momentum, too. Piper Sandler’s Harsh Kumar downgraded AMD’s stock Thursday, citing growth concerns and increased competition throughout the chip sector.

And Susquehanna International Group analyst Chris Rolland wrote in a report Thursday that the Arc chips, which will be primarily used for PC gaming, “could heat up” competition with AMD and Nvidia.

“At the right price point,” Rolland noted, Intel may be able to quickly “obtain share in an otherwise supply-constrained market.”

Intel is likely to give investors an update on supply chain issues when it reports earnings for the fourth quarter on Wednesday.



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Mark White

Mark White

Mark White is the editor of the ProcurementNation, a Media Outlet covering supply chain and logistics issues. He joined The New York Times in 2007 as an commodities reporter, and most recently served as foreign-exchange editor in New York.

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