Intel seeks to regain market share with Wall Street facing long road ahead

Intel seeks to regain market share with Wall Street facing long road ahead

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Intel’s stock price fell 7% on Friday because of Wall Street analysts’ concerns about how long the chip maker might take to increase the gap with competitors.

In recent years, Intel has been working hard to develop new manufacturing technologies, which has allowed it to lag behind rivals AMD and Nvidia Corp in the race to manufacture smaller chips at faster processing speeds.

Patrick Gelsinger, who returned to the company as CEO this year, has announced plans to spend as much as $20 billion to build two factories and open its factories to other chip makers and advance chip manufacturing capacity.

“There are significant issues that must be overcome if this is to be a success, with investment ahead of time and profits unlikely until after 2025 if not later,” Atlantic Equities analyst Ianjit Bhatti said.

“In the near term (2-3 years), we do not believe that Intel has an answer to AMD’s market share gains.”

On Thursday, Intel announced its second-quarter profit forecast that fell short of analysts’ average expectation. The company’s Chief Financial Officer George Davis told Reuters that the lower profits were because the company was investing in ramping up its new 10-nanometer and 7-nanonmeter manufacturing technologies.

Gelsinger has also announced plans to make chips for car plants at its factories to help alleviate a global chip shortage that has hit the automotive industry.

Analysts were largely on the sidelines; 26 of the 40 covering the stock have a “hold” or lower rating. Fourteen analysts have a “buy” or higher rating on the stock. The current median price target on the stock is $65, as per Refinitiv data.

“The shortage…is going to require spending on a mammoth scale for chipmakers. Spending that Intel can ill-afford as it attempts to reclaim its title as the most valuable chipmaker in the U.S.,” said Samuel Indyk, senior analyst at uk.Investing.com. 

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