We recently compiled a list of the 10 Worst Performing Blue Chip Stocks in 2024. In this article, we are going to take a look at where Intel Corp. (NASDAQ:INTC) stands against the other worst performing blue chip stocks in 2024.
Strong Market Performance Amid Uncertainty
The third quarter ended with a bang, with all the major indices near record highs as investors shunned macroeconomic instability, soaring geopolitical tensions and U.S. election uncertainty. Strong gains in the quarter were fuelled by expectations of lower interest rates heading into year-end and growing expectations of a soft landing of the U.S. economy.
Artificial intelligence has been a big success story that has helped push the equity markets to record highs. Against the overall trend, the current bull market had a better second year, up 33% compared to the historical average of 13%, and a better first year, up 22% compared to the historical average of 44%, according to BofA. It’s also important to remember that even bull markets’ third years of growth can be rocky.
READ ALSO: 10 Most Promising Future Stocks According to Analysts and 10 Most Promising Growth Stocks According to Hedge Funds.
While the S&P 500 has gained over 60% since the 2022 lows, researchers at BofA note that there could be a significant pullback in the near future.
“Historical studies suggest that the third year of a typical bull market tends to be unremarkable as a mild bout of de-rating overshadows humdrum earnings growth,” BofA equity strategist Ritesh Samadhiya said in a note to clients.
Economic Concerns and Investment Opportunities
While voicing concern that the economy is running at a hotter-than-desired pace, Federal Reserve Governor Christopher Waller hinted that future interest rate cuts would be less drastic than the significant move in September. According to policymakers, recent employment, inflation, GDP, and income reports indicate that the economy might not slow down.
“While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said in prepared remarks for a conference at Stanford University.
The sentiments come as investors remain cautious about the long-term outlook amid soaring geopolitical tensions and economic uncertainties. The growing uncertainties have been one of the catalysts behind some of the worst-performing blue chip stocks in 2024.
Nevertheless, some underperforming stocks may allow investors to purchase the long-term decline. However, many are just dealing with issues unique to their company, such as bloated balance sheets or broken business models.
It might be a while before the market bounces back. In the interim, investors should be aware of the market’s possible value stocks. Even if it is not popular or profitable in the short term, the long-term benefits of investing wisely and deviating from the crowd can be significant, according to the contrarian investing philosophy.
Investing during a market downturn may present chances for sizable returns in the long term. We examine the top 10 blue-chip losers to date and potential opportunities for investors to acquire them.
Source: Pixabay
Our Methodology
To prepare this article, we began by listing all the holdings of the various blue chip ETFs like E.A. Bridgeway Blue Chip ETF, Vanguard Mega Cap ETF, and DOW 30. We then sourced the year-to-date share price returns for each company. Based on these returns, we ranked the companies in descending order.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Intel Corp. (NASDAQ:INTC)
Year to Date Return: -50%
Number of Hedge Fund Holders: 75
Intel Corp. (NASDAQ:INTC) is one of the largest semiconductor companies that designs, develops and sells computing and other related products. While semiconductors have seen their market value skyrocket amid artificial intelligence, that has not been the case for Intel.
The company has lost more than half its market value over the past five years and is down by about 50% for the year, affirming why it is one of the worst-performing blue chip stocks in 2024. The underperformance comes from the company struggling with production delays, chip shortages, and abrupt strategic changes under several CEOs.
Intel Corp. (NASDAQ:INTC) produced the tiniest, densest, and most potent x86 CPUs worldwide for many years. However, each generational upgrade made smaller chips more difficult and costly. Consequently, a large number of chipmakers, including AMD, outsourced the entire manufacturing process and spun off their capital-intensive foundries.
Intel Corp. (NASDAQ:INTC) fell behind TSMC and Samsung’s foundries in the “process race” to produce smaller and denser chips, but it also declined to follow AMD’s lead and become a fabless chipmaker. It attempted to catch up, but those disorganized attempts slowed down the development and manufacturing of its chips.
Many of its customers switched to AMD in order to secure a consistent supply of higher-end chips made by TSMC after becoming dissatisfied with its ongoing delays and shortages.
Amid the struggles, the company’s long-term prospects are slowly improving, having inked a $3 billion deal as part of the CHIPS act with the U.S. Pentagon. Likewise, the company’s P.C. chip, Intel 7, derived from the company’s 10-nanometer (nm) process, is increasingly eliciting strong demand, allowing the company to regain market share in the P.C. market.
Here is what ClearBridge Large Cap Value Strategy said about Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter:
“While the market environment clearly was a headwind in the third quarter, several of our large positions also faced challenging conditions, which negatively impacted results. In the information technology (IT) sector, Intel Corporation (NASDAQ:INTC) has come under additional pressure due to continued softness in the company’s core PC and server markets as well as concerns on the company’s longer-term competitive position. While Intel’s turnaround is not happening overnight, we are constructive on the outlook into 2025: the company’s product positioning should be much improved and it should be positioned to gain market share in a cyclical upswing in which it has strong earnings power. A somewhat adverse spending environment due to AI myopia has weighed on shares, but we still think the market is undershipping PCs and general servers following a COVID normalization period that saw demand get pulled ahead and then languish as companies froze IT budgets. The installed base is now getting older, and we expect a strong refresh cycle into next year. The delay is actually beneficial to Intel, whose product positioning will be all the more improved. While our investment case is not predicated on an M&A transaction, and we believe one is unlikely, the expression of interest in the company speaks to the value of the assets, which we think still trade at a meaningful discount to fair value.”
Overall INTC ranks 1st on our list of the worst performing blue chip stocks in 2024. While we acknowledge the potential of 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 more promising than INTC, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.