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Intel Corporation (INTC) Declined Due to Extended Turnaround in Foundry Business

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4 months ago

August 28, 2024

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Intel Corporation (INTC) Declined Due to Extended Turnaround in Foundry Business

Ariel Investments, an investment management company, released its “Ariel Global Fund” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the Ariel Global fund fell -3.12% underperforming the +2.87% return of its primary benchmark, the MSCI ACWI Index, and -0.59% return of its secondary benchmark, the MSCI ACWI Value Index. Ariel follows a non-consensus approach to identify undervalued, out-of-favor franchises that are misunderstood and mispriced. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Ariel Global Fund highlighted stocks like Intel Corporation (NASDAQ:INTC), in the second quarter 2024 investor letter. Intel Corporation (NASDAQ:INTC) designs, develops, manufactures, markets, and sells computing and related products and services. The one-month return of Intel Corporation (NASDAQ:INTC) was -34.71%, and its shares lost 41.88% of their value over the last 52 weeks. On August 27, 2024, Intel Corporation (NASDAQ:INTC) stock closed at $20.07 per share with a market capitalization of $85.819 billion.

Ariel Global Fund stated the following regarding Intel Corporation (NASDAQ:INTC) in its Q2 2024 investor letter:

“Alternatively, several positions weighed on performance. One of the world’s largest semiconductor chip manufacturers by revenue, Intel Corporation (NASDAQ:INTC), underperformed in the period on news of a longer than expected turnaround in profitability within the Foundry business. This was exacerbated by disappointing near-term guidance due to a weakening demand environment signaling an extended replacement cycle. We view the quarter as a temporary trough that should dissipate as we see signs of a cyclical recovery for personal computers (PCs) and central processing units (CPUs), driven by the Windows 11 upgrade. In our view, the market is overlooking the progress Intel is making to advance its manufacturing process. Not to mention, the company’s efforts to serve as a viable second source foundry partner of leading-edge silicon. We believe the separation of the design and manufacturing businesses will be a key catalyst in unlocking improved financial performance while also enhancing the competitiveness of the foundry business.”

A technician soldering components for a semiconductor board.

Intel Corporation (NASDAQ:INTC) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 75 hedge fund portfolios held Intel Corporation (NASDAQ:INTC) at the end of the second quarter which was 77 in the previous quarter. The second-quarter revenue of Intel Corporation (NASDAQ:INTC) was $12.8 billion, down 1% year-over-year and up 1% sequentially. While we acknowledge the potential of Intel Corporation (NASDAQ:INTC) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Intel Corporation (NASDAQ:INTC) and shared the list of stocks hedge funds are buying and selling. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.