Is it always a good thing when a company’s management is ultra-confident? Not necessarily, when it comes to Intel (NASDAQ:INTC) stock.
Some traders and analysts aren’t fully convinced that the chipmaker can recover its lost ground in 2023. Before jumping into the trade, take a serious look at Intel’s headwinds and consider sitting on the sidelines for the time being.
Intel was once America’s undisputed microchip champion. However, the company has lost significant market share in recent years. Furthermore, a soft PC market certainly isn’t making it easier for Intel to stage a long-awaited comeback.
That comeback might never happen, or it could take years. Are you really willing to wait around and hope that Intel doesn’t cut its dividend and/or lose more ground to its competitors? Be sure to ask yourself tough questions and consider your patience level before putting Intel shares in your portfolio.
Management’s Confidence Isn’t Enough
“We’re completely on track,” Intel Vice President Ann Kelleher declared recently at a press conference. This sentiment echoes CEO Pat Gelsinger’s vow that Intel will regain its leadership position in production technology.
This is easier said than done, however. More than half of Intel’s sales stem from the PC market, which has been weak lately. Besides, even if the PC market recovers, that probably won’t be enough to rescue Intel from further fiscal problems.
Mizuho analyst Vijay Rakesh gave INTC stock a “neutral” rating, which certainly isn’t an enthusiastic endorsement. Reportedly, Rakesh envisions further market-share loss for Intel into the first half of 2023.
Meanwhile, Citi analyst Christopher Danely anticipates that the market environment for PCs will remain poor into 2023. Danely observes low demand and excess inventory in the PC market – and again, that’s a huge part of Intel’s sales.
Don’t Count on an Imminent Turnaround
It seems like one Wall Street expert after another is trying to warn prospective investors. Here’s another one: Cowen analyst Matthew Ramsay gave Intel a “market perform” rating, which is basically neutral. Ramsay warned, “The near term will be difficult” for Intel.
Before you try to be a hero and scoop up Intel shares, be sure to hear Ramsay’s message. It’s “far from a foregone conclusion that the ambitious turnaround contemplated will be successful,” the Cowen analyst wrote. Moreover, 2023 and 2024 “are likely to be exceptionally difficult years for the company, coming off a rough 2022.”
Stubborn perma-bulls should also listen to JPMorgan analysts, who downgraded INTC stock from “overweight” to “underweight.” Those analysts cautioned, “it will be several years before Intel is able to reverse the tide to reclaim technology leadership in hopes of regaining market share.”
Now Is Not the Right Time to Buy INTC Stock
It’s unfortunate that Intel has fallen from a leader to a laggard in the microprocessor industry. America could benefit from a new and improved Intel, but there’s scant evidence of a major turnaround.
INTC stock gets a “D” rating rather than an “F” as Intel might be able to recover its leadership position someday. Yet, despite the management’s confidence, don’t assume that Intel’s comeback will happen in 2023 or even in 2024. For the time being, it’s wise for investors to find another chipmaker stock as Intel has a lot of catching up to do.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place