AI Strategy Mistakes Lead to Sharp Drop in Intel's Share Price

Intel's failure to seize the opportunity in the wave of artificial intelligence has led to a dramatic decline in its share price.

So far this year, Intel's stock price has fallen about 60% cumulatively, and its market capitalization has fallen below $100 billion. The main reasons include the company's multiple strategic mistakes, especially its refusal to invest in the then-unknown OpenAI in 2017.

With the rapid development of AI technology, especially in the field of generative AI, competitors such as Nvidia have achieved remarkable success, and Intel has not been able to seize the growth opportunities in this wave of AI boom well.

Chip Foundry Business Losses Worsen

In order to revitalize the company, Intel's current CEO Pat Gelsinger, who has been in office since 2021, has put forward a plan to return the chip manufacturing business to the U.S. mainland, and has attempted to catch up with global chip foundry giant TSMC by vigorously developing the chip foundry business.

However, as of now, Intel's progress in this area is not as expected. According to the second-quarter earnings released in August this year, Intel's chip foundry business loss reached 2.8 billion U.S. dollars, a serious drag on the overall performance, resulting in its shares plunged 26% in a single day after the release of the earnings report, hitting the worst single-day decline in 50 years. This loss exacerbated market concerns about Intel's future.

At risk of being removed from the Dow Jones index

Intel has been a constituent of the Dow Jones Industrial Average since the dot-com bubble of the late 1990s, but the company is at risk of being removed due to poor share price performance.

Ryuta Makino, a research analyst at Gabelli Funds, pointed out that NVIDIA's shares have surged 118.08 percent this year, climbing to the world's third-largest company by market capitalization, and could replace Intel in the Dow.

Despite NVIDIA's outstanding performance, but its stock price volatility, Synovus Trust senior portfolio manager Daniel Morgan believes that the Dow Jones index may choose more stable large enterprises such as Texas Instruments as an alternative option.

As of September 3, Texas Instruments shares have risen a total of 18.40% this year to $ 201.83, close to the Dow Jones components of the average share price level of $ 209, becoming a more suitable candidate.

Intel's future trend and investor response strategy

If Intel is eventually removed from the Dow Jones index, it could trigger more market selling and further depress its share price. This will not only affect Intel's market image, but may also erode investor confidence and lead to a sustained decline in share price.

Investors should pay close attention to Intel's future strategic adjustments, especially its performance in the chip foundry business and how it responds to the competitive pressure in the global semiconductor market.