Bargain Pick or Kodak Clone?

What Happened?

Is there a stock that has been more disappointing over the past 15 years than Intel Corporation (INTC)?

It really isn’t that long ago Intel was the dominant player in the computer chips market.

It had a chip in every PC.

It had the ‘Intel Inside’ catchphrase… which was also a sign to the potential PC buyer that they could trust performance.

Not to mention the fact that Intel even copyrighted the four-note jingle it uses in its ads (you know the one).

Intel had it all… until it didn’t.

Today, the company and the stock aren’t even mentioned in the same breath as the market’s true tech giants.

Why it Matters

Yesterday, Intel tried to regain its relevance.

It fired its CEO, Pat Gelsinger.

According to the Bloomberg News report:

‘[Gelsinger] was forced out after the board lost confidence in his plans to turn around the iconic chipmaker, adding to turmoil at one of the pioneers of the technology industry.’

To put things in perspective. Since late 2014, the Intel stock price is down 31%. Over the same period, Nvidia (NVDA) is up 29,955%.

Could there be a starker contrast?

Without getting too far into the weeds, it’s a great example of what can happen when a niche player, playing in niche markets, suddenly finds it’s the main player in the main game. That’s Nvidia.

Nvidia’s main business used to be graphics cards for computing. That allowed it to tap into the booming gaming industry. Then in the years after 2010, folks used Nvidia chips in the newly booming Bitcoin mining industry.

Then finally, the biggest boom of all — artificial intelligence, AI.

It was that trend that has taken Nvidia to becoming the world’s biggest company, with a market capitalization of $3.4 trillion. That’s 34-times the size of Intel, which can barely boast a $100 billion market cap.

How it Affects You

How did the stock price react to the CEO’s firing? The price bounced at the open… before investors realized they just didn’t care about Intel.

The stock ended the day lower.

In truth, when Intel hires its next CEO, don’t be surprised if the price action is similar… a bump and then apathy.

For investors, though, is Intel the kind of story where it’s worth buying the stock at what appear to be bargain-level lows? Or is it the kind of stock that’s perhaps going through a ‘Kodak-like’ long demise?

We fear the latter, but hope for the former. Our take is that investors should sit this one out for now. There’s unlikely to be a rush to get in. The stock price still hasn’t conclusively shown it has broken out of its long-term downtrend (although it has trended higher since August).

We would want to see a couple more earnings results and find out the new CEO. If that all appears positive, it could be the time to get in. Until then, we wait.