In no uncertain words, Intel’s stock has been a dog. As we share below, Intel (NASDAQ:) stock has increased by a mere 2% over the last 20 years, while the tech-heavy () has risen by over 1,200%. Over the previous 20+ years, Intel’s management has made many missteps, including:
- Apple (NASDAQ:): Declining to supply chips for the iPhone in 2007.
- EUV: Its delayed adoption of extreme ultraviolet lithography (EUV) allowed competitors, such as Taiwan Semiconductor and Samsung, to surpass it.
- AI: Intel’s Gaudi AI accelerators pale in comparison to Nvidia (NASDAQ:) GPUs, which have gained massive market share and immense profits.
- AMD: has eaten into Intel’s share in CPUs for PCs and servers.
With dirt-cheap valuations compared to its competitors, Intel investors are pricing in more of the same. However, Intel is making an effort to turn things around. Here are a few things they are working on to change their fortunes:
- Foundry: They believe they can become a major player in the chip foundry business. To wit, they have deals with Amazon (NASDAQ:) and Microsoft (NASDAQ:). Furthermore, they are based in the US, which may provide a competitive advantage versus Taiwan Semiconductor and other foreign competitors.
- AI: They are enhancing their Gaudi 3 AI accelerator to compete with Nvidia.
- New leadership: Lip-Bu-Tan became the CEO in March.
- PC upgrade Cycle: After a few years of little growth in the PC market, sales are expected to pick up. The company believes its redesigned Core series can give it an edge.
Intel shares are cheap for a reason. The new initiatives, along with others, are expensive, resulting in high debt loads and negative cash flows. Success on some or all of their latest projects is necessary, or Intel shares could languish for another 20 years. Success could spell fortunes for patient shareholders.
What To Watch Today
Earnings
- No earnings reports today.
Economy
- No economic reports today
The Week Ahead And The BLS Jobs Report
The was much better than expected. The BLS reports that the economy added 147,000 jobs in June, almost 50,000 more than was expected. The report stands in stark contrast to Wednesday’s report, which showed the economy lost 33k jobs. Further encouraging news from the BLS, the slipped to 4.1% from 4.2%.
While the headlines were positive, there was some concerning data within the report. For instance, half of the payroll growth was from government jobs. According to the table below, the Federal government shed 7,000 jobs, while state and local jurisdictions added 80,000. Moreover, average hourly earnings rose 0.2%, compared to 0.4% last month.
At the same time, average hours worked fell by a tenth of a percent. Based on the initial market reaction, the Fed is unlikely to entertain rate cuts at the July meeting.
This week will be relatively quiet as the market readies for earnings announcements and / data next week. The Treasury will auction notes on Wednesday and bonds on Thursday. Yields may stay elevated as dealers position for those auctions.
Also of note this week is the from the prior meeting. We will be interested to see if there is a fraying of opinions. Might a growing minority be willing to sooner than Powell has been alluding to?
Annuities Are Not Your Enemy
Utter the word ANNUITY and watch facial expressions. They range from fear to disgust to confusion. But hear me out: Annuities are not your enemy.
Billionaire money manager and financial pitchman Ken Fisher appears as a haunting senior version of Eddie Munster in television ads. He stares with deep eyes ablaze with intensity. The tight camera shot. A dramatic pause, then solemnly he delivers the line:
“I hate annuities. I’d rather go to hell then sell annuities.”
Which means you should, too. The financial professional with a net worth greater than 500,000 households worries little about lifetime income or portfolio principal loss. He doesn’t think you have to, either.
Ken Fisher is a master marketer. There’s no doubt his prowess in pitching his wares, raking in big bucks for his firm. However, what he knows academically about annuities and how they mitigate life expectancy risk can fit into a dollhouse thimble. And that’s fair because he doesn’t need to worry about running out of wealth. You most likely do.
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