Down 45%, Should You Buy the Dip on Intel?

Even before the market sell-off, Intel's (NASDAQ: INTC) stock struggled. That perhaps should be no surprise. The semiconductor company has been largely left behind in the artificial intelligence (AI) infrastructure build-out mania, while its foundry ambitions have floundered. Meanwhile, past acquisitions by and large haven't panned out. Intel stock is down 45% in the last year.

Can a new CEO on board help turn around the company and boost the stock?

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Turnaround effort

Intel named a new CEO last month, tapping long-term industry vet Lip-Bu Tan to run the struggling company. Tan previously served as CEO at Cadence Design Systems, which provides software and hardware for electronic design automation. He previously served on Intel's board of directors until stepping down last year.

Tan's turnaround plans appear to be focused on revitalizing the company's efforts in AI chips, improving its foundry business, and streamlining the company. Those first two steps will not be easy.

Intel's market share in the graphic processing unit (GPU) space is virtually zero at this point, with it well behind not only leader Nvidia but Advanced Micro Devices as well. The company tried multiple times to create a GPU to compete against Nvidia, only to fail in the process. Intel's latest setback occurred earlier this year when it scrapped its plans to bring its Falcon Shores GPU to the market, instead deciding to use it only as an internal test chip.

As last reported, the company has turned its focus to its Jaguar Shores GPU, which it is deigning specifically for AI inference and high-performance computing. It appears the chip will be part of a broader rack-scale system, not just an individual chip.

Nonetheless, making inroads against Nvidia will be difficult. The GPU leader created a wide moat through its CUDA software platform, which it developed to let its chips be programmed for tasks beyond their original purpose of speeding up graphics rendering in video games.

However, in the years since, it built a collection of libraries and services on top of CUDA, centered on AI and high-performance computing that help accelerate AI training and speed up inference. With developers already trained on programming GPUs through CUDA and the software continuing to improve, taking any significant market share away from Nvidia seems highly unlikely.

While there has been a lot of talk of Intel looking to spin off its foundry business, this does not look to be in the cards currently. For one, the money the company has received as part of the CHIPS Act to build out new semiconductor manufacturing facilities, or fabs, is predicated on Intel keeping a majority stake in the foundry business.

Second, on its own, the foundry business might go bankrupt. Intel poured a ton of money into building new manufacturing capacity, but the unit continues to pile up the losses. In 2024, Foundry segment revenue fell 7%, while it produced a $13.4 billion loss. Rival Taiwan Semiconductor Manufacturing, meanwhile, is reportedly in talks with Intel to run its fabs through a joint venture in exchange for a 20% stake.

Intel has also been betting big that its new 18A process can help turn around its foundry operations. Earlier this month, the company entered risk production, which is the stage before mass production to access yield rates and any flaws. It has had production issues with this new process in the past, so this is good news.

Image source: Getty Images

Is it time to buy the stock?

Intel still has an uphill battle to turn itself around. However, the company owns a lot of physical assets with its foundry business, where it has spent nearly $50 billion the past two years in capital expenditures (capex). Meanwhile, its core products business did modestly grow revenue by 3% last year. That's not great, but it's also not a business in free fall.

In addition, the company can sell noncore assets. This includes Altera, which the company just announced it is selling a 51% stake in to private equity company Silver Lake for $4.46 billion. Intel will keep the remaining 49% of the company.

The deal values Altera in its entirety at $8.75 billion, which is nearly half the $16.7 billion it paid for the company in 2025. It also owns an over 88% stake in Mobileye. While also well below the $15.3 billion it paid for the company, it still also has value.

Trading at a price-to-tangible book value ratio of 1.2 times, Intel stock is trading just above the physical value of its assets. Given that many of its foundry assets are pretty new, I think that valuation is cheap enough to take a chance on the stock at these levels. A turnaround might not be fully coming, but there should be levers available to unlock value and help increase the stock price.

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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Cadence Design Systems, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Mobileye Global and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.