US based chipmaker leader Intel Corp is possibly hit by the worst crisis for the first time in 56 years. If reports are to be believed, the NASDAQ listed company is taking the help of investment bankers to sail through the tough waters.
Bloomberg reports that the tech giant is considering a range of options, including possibly separating its product design and manufacturing divisions and reevaluating which factory projects might be cut, as it navigates significant challenges in an evolving industry landscape.
According to multiple reports, Morgan Stanley and Goldman Sachs Group Inc., Intel’s long-time bankers, have been advising on various possibilities, including potential mergers and acquisitions. These discussions have become increasingly urgent after the Santa Clara, California-based company released a disappointing earnings report, causing its shares to plummet to their lowest level since 2013.
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Intel’s Worry at the Wall Street
The company posted a net loss of $1.61 billion last quarter, and analysts are forecasting further losses in the coming year. Intel has been reducing its workforce by thousands to maintain its competitiveness and sold its 1.18 million share stakes in the British chip company Arm Holdings earlier this year.
More layoffs are expected to happen as the company tackles the crisis.
On 4th of August, Intel's stock dropped 26 per cent, closing at $21.48—its lowest level since 2013,. The company's bleak forecast and cost-cutting measures have cast significant doubt on its future. Bernstein analyst Stacy Rasgon, as reported by Reuters, described Intel's situation as "nearing an existential crisis."
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Intel has also fallen out of the top 10 chipmakers worldwide by market value, which has declined to $86 billion. As recently as 2021, Intel's annual revenue was three times that of Nvidia. Intel's server chip business has taken a hit as companies focus their spending on AI chips, an area where it trails behind rival Nvidia, one of the world's most valuable companies.
The slump in Intel’s stock comes at a time when Nvidia has been rocking Wall Street with huge returns for its shareholders. As per market data, Nvidia has posted 144 per cent returns in 2024. Compared to Nvidia, Intel is in a precarious situation, its stock has declined by 57 per cent this year.
The company would hope that the revival plan it is working on is able to turn around its fortunes on Wall Street. With Intel chalking up a plan in its boardroom, investors have one question on their minds: will the tech giant join the AI party?
