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Intel stock keeps its potential despite adversity

Intel Corporation is an American company characterized by the manufacture of processors and integrated circuits. It has always been one of the companies with the largest share in the technology market, specifically in servers and PC processors.

However, regardless of its dominance and greatness, during the last few years, Intel has gone through a rough period.

Intel has faced several problems that cause delays in the company’s performance. Perhaps, the main reason is the shortage of chips in the technology market, impacted by the sanitary restrictions implemented during Covid-19. Facing this adverse situation, Intel’s plans to deal with the shortage of chips have changed their manufacture. 

The company wants to source some components from Taiwan Semiconductor Manufacturing Company (TSMC) to accelerate its chip development process. It is also going to invest more than $20 billion in the creation of two state-of-the-art chip factories near Columbus, Ohio.

Without any doubt, Intel has become the undisputed leader in the design and integrated manufacturing of microprocessors used in computers and servers. It ruled in the personal computer era, maintaining a partnership with Microsoft. This situation changed in the face of the rapid growth of cell phones. The company has not entered the smartphone market and this has negatively impacted its stock. 

Last year, Intel lost almost 27% of its value. So far this year, it is down nearly 12% and is underperforming the S&P 500. The company has lost its place in the market to competition like Advanced Micro Devices (AMD), as its largest customers, such as Apple and Microsoft, are slowly turning to its in-house designed chips. 

Despite Intel’s poor responsiveness to adversity, not everything is negative around the company. Although its revenue of $19.5 billion for the quarter was low, it beat the company’s previous forecast by $1.2 billion. Its revenue increase was driven by 20% year-over-year growth in its data center segment.

Nevertheless, for the next quarter, Intel expects its revenue to be only $18.3 billion.

Intel’s current outlook is not the best after the continued loss of market share. However, thanks to its plans, the company trusts in regaining industry leadership by 2025, at least in the chip segment, which has been reflected by its 5% dividend increase.

Buying Intel stock right now may not be the wisest decision. But don’t feel disappointed if you own some, most analysts give it a Hold rating. Who knows? Maybe it will bring some sweet benefits in the future.

What do you think? What are your forecast for the company and its share price?

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