In the past few months, Intel has not been doing so well against its competitors. The company turned out to be unprepared for the increased demand for its processors, lagging behind competitors who are mastering new technical processes and losing such status customers as Apple. The share price is falling against the background of such news.
And at the same time, there is news that large investment funds are reducing their stakes in Apple, Tesla and Microsoft for the shares of the chip manufacturer? How can this be - we understand our new material.
What are Intel's problems
Intel's difficulties lie on several levels at once. Firstly, competitors from AMD and NVIDIA show themselves excellently. So, for example, the growth in the value of AMD shares amounted to almost 2000% in five years, the company's market capitalization exceeded $ 100 billion. In its turn, in July this year, NVIDIA was able to surpass Intel in terms of capitalization for the first time.
These companies are increasing their market share and launching new technological processes. Against their background, Intel is lagging further and further - the company is postponing the release of its 7-nanometer chips until at least the end of 2022. This is due to production problems. AMD is already selling them and releasing updated versions.
As a result, AMD's share of the server chips and performance desktop market is growing, while Intel's is shrinking. NVIDIA is also growing on expectations of the release of the next generation of game consoles Sony PlayStation 5 and Xbox Series X. The company is also helping the release of video cards based on the new new graphics architecture Ampere. Analysts also predict growth in the server segment - here the company also squeezes Intel.
In addition, during the recent WWDC 2020, Apple announced plans to ditch Intel processors and move to in-house chips for Mac computers. The first computers with Apple Silicon will be released at the end of this year, and the Cupertino-based company plans to completely switch to processors of its own design within two years.
Why big investors still believe in Intel
Against the background of this information, the news that one of the largest US funds, the Oregon Public Employees Retirement Fund, has reduced its stake in Apple, Microsoft and Tesla and invested free funds in Intel stocks, might seem surprising.
All three companies, the share in which the fund reduced, rose to historic highs by the end of the quarter. Intel shares, on the other hand, declined or showed neutral dynamics. This could have become an important factor - the owners of assets with the highest price in their entire history can more actively invest in what they think are undervalued shares.
In addition, despite the negative in the press, today Intel controls about 95% of the server processor market and more than 80% of the market for chips for personal computers. Moreover, the development of processors is not the only source of income for the company - Intel also develops solutions for data centers, products in the field of artificial intelligence, 5G networks and the Internet of Things.
Therefore, even delays in the release of new processors and the departure of large customers like Apple do not seem critical to many investors. So in the case of a company from Cupertino, Intel's losses could amount to $ 2.5 - $ 3.5 billion in revenue per year, while the annual revenue plan for 2020 is $ 73.5 billion.
In Russia, shares of American companies, including Apple and Intel, can be buy on the St. Petersburg Stock Exchange- for this you do not need to open an account with a foreign broker, a Russian account will be enough. You can open it online .
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