In the unforgiving realm of artificial intelligence, a single misstep can swiftly sideline your company or significantly hinder its chances of success. This is a lesson that Intel (NASDAQ: INTC) learned the hard way when it disclosed $7 billion in losses for its chip-making foundry in 2023.
This loss comes on the heels of an even larger setback than the $5.2 billion in operating losses reported the previous year. The unit generated revenue of $18.9 billion for 2023, marking a sharp 31% decline from $27.49 billion the year prior.
These losses beg the question of whether Intel can keep pace with its competitors, particularly Taiwan Semiconductor Manufacturing (NYSE: TSM).
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INTC stock was quick to react to the news
The news swiftly impacted INTC stock, which dropped 5.14% in pre-market trading, following a 1.30% decline in the previous trading session. This retracement negates the 4.92% progress made over the past five trading sessions.
Taking a broader view of the year-to-date (YTD) chart, red dominates as INTC shares have regressed by 8.08% since the beginning of 2024.
Examining technical indicators like support and resistance, INTC is nearing its support zone, ranging from $41.27 to $43.82.
On the flip side, to advance further, INTC would need to surpass the resistance zone set at $46.16.
Maybe not all hope is lost for INTC stock
Intel is undertaking a significant investment initiative, with plans to allocate $100 billion across four U.S. states for the construction and expansion of factories. This move comes after the company secured $19.5 billion in federal grants, consisting of $8.5 billion in grants and $11 billion in loans.
Additionally, on April 1, UBS updated its stance on Intel, lifting the stock’s price target to $50 from the previous $46 while retaining a Neutral rating. This change is prompted by Intel’s announcement concerning the restructuring of its profit and loss (P&L) statement, along with the anticipated revenue and margin enhancements for Intel Foundry.
Furthermore, Intel has been making notable progress in producing advanced AI chips in recent months, as evidenced by its Gaudi3.
In light of the recent news of the evacuation of a TSM factory due to an earthquake in Taiwan, which is likely to disrupt production, perhaps INTC stock has received the breathing room it desperately needed.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
