Intel is the Dow’s biggest loser

[soAsian]

Intel is the Dow's biggest loser

Semiconductors are in everything. Our phones, our laptops, our televisions. Even our cars. But concerns about a global recession and continued worries about supply shortages stemming from lingering pandemic-related shutdowns in Asia over the past two years are hurting top chip companies.

www.cnn.com

"Shares of Intel are down more than 45% this year, making it the biggest dog of the Dow."

ouch

 

[lilo777]

Are there any other chip makers in the Dow? Otherwise there is no basis for comparison here. YTD, INTC did better than their main competitors (AMD and NVDA).

 

[blueone]

Intel is the Dow's biggest loser

Semiconductors are in everything. Our phones, our laptops, our televisions. Even our cars. But concerns about a global recession and continued worries about supply shortages stemming from lingering pandemic-related shutdowns in Asia over the past two years are hurting top chip companies.

www.cnn.com

"Shares of Intel are down more than 45% this year, making it the biggest dog of the Dow."

ouch

Are there any other chip makers in the Dow? Otherwise there is no basis for comparison here. YTD, INTC did better than their main competitors (AMD and NVDA).

Intel is the only pure-play chipmaker in the DJIA. Apple and IBM are also DJIA stocks, but they aren't really chip stocks.

That CNN article is useless. The reasons why INTC is down so much aren't listed or explained. Sometimes I want to be a popular news journalist, just so I can be stupid and get paid for it.

 

[nghanayem]

Are there any other chip makers in the Dow? Otherwise there is no basis for comparison here. YTD, INTC did better than their main competitors (AMD and NVDA).

That is wild to me. Considering both of these companies are on the up and up, whereas intel's future is highly uncertain. If I had to take a shot in the dark my guess would be that those fat dividends have something to do with it.

 

[blueone]

That is wild to me. Considering both of these companies are on the up and up, whereas intel's future is highly uncertain. If I had to take a shot in the dark my guess would be that those fat dividends have something to do with it.

While there aren't any successful DJIA index funds that I'm aware of, the S&P500 and NASDAQ100 seem to be the leaders in index funds, there are numerous EFTs which track the DJIA. All of those EFTs represent DJIA (often called Dow-30 these days) stock ownership. I suspect (but can't prove) that all of the DJIA stocks are being propped up to some degree by these EFTs and diversified mutual funds. Falling out of the DJIA would cause a drop in any one of the 30 stocks in that index, especially INTC. I also agree that the INTC dividend, currently about 5%, is a strong factor.

 

[lilo777]

That is wild to me. Considering both of these companies are on the up and up, whereas intel's future is highly uncertain. If I had to take a shot in the dark my guess would be that those fat dividends have something to do with it.

AMD and NVDIA had a great run and seemingly are in a better shape than Intel right now. But INTC stock dropped too low and it's much less volatile now than the other too. If the market recovers, AMD and NVDA ill probably jump ahead. In this case, YTD happen to reference the period when the marked crashed and the stocks with higher P/E had more to lose (and they did). Also, INTC stock will have a different dynamic from the other two stocks because Intel is heavily investing in the foundry business. Their heavy capital expenditures is a big factor why the stock is down. Until the investors get better idea whether the foundry bet pans out or not, it is highly unlikely that INTC recovers.

 

[hist78]

AMD and NVDIA had a great run and seemingly are in a better shape than Intel right now. But INTC stock dropped too low and it's much less volatile now than the other too. If the market recovers, AMD and NVDA ill probably jump ahead. In this case, YTD happen to reference the period when the marked crashed and the stocks with higher P/E had more to lose (and they did). Also, INTC stock will have a different dynamic from the other two stocks because Intel is heavily investing in the foundry business. Their heavy capital expenditures is a big factor why the stock is down. Until the investors get better idea whether the foundry bet pans out or not, it is highly unlikely that INTC recovers.

"Their heavy capital expenditures is a big factor why the stock is down. "

Although Intel's heavy Capex is hurting Intel's profit, Capex is amortized to multiple years and consequently reduces its negative impact for a particular year.

I believe Intel's shrinking revenue or stalled revenue growth is a major concern among investors. Revenue growth is a good indicator of Intel's ability to compete. It's especially important when other semiconductor companies are getting double-digit growth.

 

[hist78]

While there aren't any successful DJIA index funds that I'm aware of, the S&P500 and NASDAQ100 seem to be the leaders in index funds, there are numerous EFTs which track the DJIA. All of those EFTs represent DJIA (often called Dow-30 these days) stock ownership. I suspect (but can't prove) that all of the DJIA stocks are being propped up to some degree by these EFTs and diversified mutual funds. Falling out of the DJIA would cause a drop in any one of the 30 stocks in that index, especially INTC. I also agree that the INTC dividend, currently about 5%, is a strong factor.

Among the Dow components, Intel is only weighted around 0.6% last time I checked. I have some thoughts about the DOW 30:

1. Semiconductor industry is getting more important than before. Fabless companies are making more revenue and more impactful products than IDM (like Intel). Should a fabless company, such as Qualcomm and Nvidia, be included in the index?

2. Do Intel's revenue growth, stock price, and business outlook really represent the semiconductor industry or the market trend? I think it is questionable based on intel's performance for the past two years. Is there any other semiconductor company that is in a better position to replace Intel in the DOW 30?

 

[blueone]

Among the Dow components, Intel is only weighted around 0.6% last time I checked.

Yes, the DJIA is a price-weighted index, so higher performing stocks accrue a greater weight over time than lower-performing ones. The performance of INTC has been rather abysmal compared to most of the other 29 stocks in the average. Still, based on the experience of other stocks which fell out of the Dow 30, if a company is selected to be dropped, its stock price falls every time.

I have some thoughts about the DOW 30:

1. Semiconductor industry is getting more important than before. Fabless companies are making more revenue and more impactful products than IDM (like Intel). Should a fabless company, such as Qualcomm and Nvidia, be included in the index?

The WSJ committee which manages the DJIA index does not like volatility. So QCOM and NVDA probably give them indigestion. So would MU. BRCM, the best choice IMO, probably has history that's too controversial for the committee. The chip equipment companies are pretty small, market cap-wise. Given this index is more artificial (meaning, human committee driven), as far as I'm concerned it gets far more attention than it deserves, and it wouldn't bother me at all if it went away.

2. Do Intel's revenue growth, stock price, and business outlook really represent the semiconductor industry or the market trend? I think it is questionable based on intel's performance for the past two years. Is there any other semiconductor company that is in a better position to replace Intel in the DOW 30?

My choice would be Broadcom, but, like I said, I doubt it would be considered.

 

[hist78]

Yes, the DJIA is a price-weighted index, so higher performing stocks accrue a greater weight over time than lower-performing ones. The performance of INTC has been rather abysmal compared to most of the other 29 stocks in the average. Still, based on the experience of other stocks which fell out of the Dow 30, if a company is selected to be dropped, its stock price falls every time.

The WSJ committee which manages the DJIA index does not like volatility. So QCOM and NVDA probably give them indigestion. So would MU. BRCM, the best choice IMO, probably has history that's too controversial for the committee. The chip equipment companies are pretty small, market cap-wise. Given this index is more artificial (meaning, human committee driven), as far as I'm concerned it gets far more attention than it deserves, and it wouldn't bother me at all if it went away.

My choice would be Broadcom, but, like I said, I doubt it would be considered.

Broadcom maybe a good middle ground choice.