Intel's Stock Has Fallen 38% in a Week - and It Just Got Downgraded Again

Intel Corp.'s stock has plunged 38% over the past five trading sessions, a sharp decline that might typically prompt analysts to issue upgrades, seeing an opportunity to buy into the weakness. However, in Intel's case, the reaction has been the opposite. Instead of upgrades, the semiconductor giant just faced yet another downgrade.

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After the market closed on Wednesday, Mizuho analyst Vijay Rakesh downgraded Intel's stock from outperform to neutral. Rakesh highlighted the significant challenges Intel faces in trying to reclaim its leadership position in the semiconductor industry, describing the path forward as "a tough road ahead."

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Rakesh’s downgrade adds to a growing list of analysts, including those at HSBC and Bank of America, who have also recently lowered their ratings on Intel. These downgrades followed Intel's disappointing earnings report last week, during which the company announced significant layoffs and the suspension of its dividend, alongside a bleak forecast for the future.

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Rakesh had been optimistic about Intel's prospects as recently as last November, largely due to the potential of artificial intelligence and new product developments. However, in his latest analysis, he acknowledged that his previous bullish stance was "wrong."

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He pointed out that Intel continues to fall behind its competitors and is losing market share in key areas, a trend that is expected to persist through 2025. The gap between Intel’s technology and that of its competitors has only widened, making it increasingly difficult for the company to regain its former standing.

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Rakesh also expressed concern over Intel’s product pipeline, noting that there are "no compelling products" on the horizon as the company heads into the next year. He believes that Intel’s current product roadmap is unlikely to significantly boost gross margins or drive meaningful top-line growth.

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While Intel’s various offerings in servers, artificial intelligence, and personal computers may have attractive specifications, Rakesh criticized the company for its lack of execution and delivery, which has hindered product adoption.

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Intel's struggles are not limited to market dynamics and competition. Last week, the company announced plans to cut 15% of its workforce, amounting to approximately 15,000 jobs. This move was intended to align the company’s headcount with its revenue realities. However, Rakesh warned that such deep cuts could negatively impact employee morale and further harm execution, potentially exacerbating the company's current challenges.

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Moreover, the decision to suspend its dividend, a significant move given Intel’s history, removes a key support that has traditionally attracted investors to the stock. The loss of the dividend could lead to a further decline in investor confidence, making the recovery process even more difficult.

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In light of these issues, Rakesh also revised his price target for Intel shares, slashing it from $36 to $22. He significantly lowered his earnings estimates, predicting figures that he described as "WELL BELOW" the consensus expectations. For example, Rakesh now anticipates adjusted earnings per share (EPS) of $1.10 for the next year, compared to the $1.22 projected by analysts tracked by FactSet. His outlook for 2026 is similarly pessimistic, with an EPS estimate of $1.65, versus the FactSet consensus of $1.88.

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Overall, Rakesh’s downgrade reflects a broader sentiment among analysts that Intel faces considerable headwinds in the near term. The combination of widening technology gaps, lackluster product execution, significant workforce reductions, and the suspension of dividends paints a challenging picture for the company’s future. Investors who had hoped for a quick turnaround may need to brace themselves for a prolonged period of uncertainty as Intel navigates these complex challenges.

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