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Intel Stock Falls despite the Company’s Strong Fundamentals

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Nov. 20 2020, Updated 3:43 p.m. ET

Intel stock falls despite the company’s strong fundamentals

Intel (INTC), a leader in the PC and server CPU (central processing unit) markets, has been undergoing a multiyear transition from being PC-centric to data-centric. The transition is showing results, and the company is making its mark in the 5G (fifth generation), network infrastructure, data center, and AI markets. These efforts are also reflecting in its earnings—the company expects its revenue to grow 11% YoY (year-over-year) in fiscal 2018 after growing at an annual rate of 6% for the last two years.

While Intel’s fundamentals look strong, its stock has been on a downtrend after reaching an 18-year high of $57.60 in early June. Despite the company’s strong fundamentals, the stock fell as negative news and short-term headwinds weakened investors’ confidence.

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H2 2018 rough for Intel 

In April, Intel delayed the launch of its 10nm (nanometer) Cannon Lake CPU, which was originally planned for launch in H2 2016, to the end of 2019. And in May, troubles loomed for Intel’s 14nm manufacturing capacity as PC demand picked up. The supply situation worsened in September.

Intel admitted that it is facing a supply shortage of 14nm CPUs. Advanced Micro Devices (AMD) stock peaked on this news, as Intel’s CPU shortage opened a window of opportunity for AMD to increase its share in the CPU market.

Amid these developments, Intel announced the abrupt resignation of CEO Brian Krzanich on June 21. Intel’s troubles were further aggravated with the onset of the US-China (FXI) trade war. The United States imposed 10% tariff on $200 billion in Chinese imports effective September 24, and the tariff could increase to 25% by the end of this year. 

October brought upbeat news for Intel, sending the stock up 5% on October 2. The stock rose after Bloomberg, citing BlueFin Research Partners, reported that Intel would start 10nm production in June 2019 with the possibility of moving the production earlier to April 2019. In this series, we’ll look at Intel’s headwinds and tailwinds and how they could affect investors.

Check out all the data we have added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look!

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