It is a better idea to buy stocks that are already expensive on the American stock exchange. Because if they are expensive, they can go up even more. There are many examples like this, especially in the technology sector. Since the beginning of last year, there have been those who have said that Nvidia and Palantir are expensive, but Nvidia and Palantir have continued to go up. Of course, everything has a limit, everything has an end. But in many cases in America, rising stocks continue to rise and falling stocks continue to fall. Intel is an example of this. Intel had a terrible 2024. With the appointment of a new CEO at the beginning of the year, I was a little hopeful, to be honest, that there could be a comeback story. But the new CEO couldn't do it either. He was fired anyway. It is currently being managed by two interim CEOs, and the decline at Intel continues. I don't like Intel's direction, and it seems like I will continue to dislike it. I believe there are much better microchips and artificial intelligence games. Of course, I may be wrong in my opinions. Of course, Intel stocks can go up from here. But I want to share my basic views on the company with you.
Intel had a price close to $50 at the beginning of 2024. It closed the year at $20. It is currently crawling around there. However, last year could be said to be a golden year for microchip stocks. Nvidia, Broadcom, Qualcomm, all rose, especially Nvidia. For example, Marvel, one of the small microchip manufacturers, made serious moves. Artificial intelligence excited everyone. Many things happened, but none of them worked for Intel. So what are Intel's problems? Why is Intel's stock constantly going down? Could these problems be even greater than expected? A great article on this subject was published in the Wall Street Journal called "Intel's Problems Are Even Worse Than You've Heard. I will examine Intel in some detail, using the information in this article.
Intel is undoubtedly a very important company. Just 5-10 years ago, Intel was described as a success story, an innovation giant. There would be a label on our personal computers saying Intel inside, saying that there were Intel chips inside. This would give us confidence, but unfortunately Intel has not been able to keep up with the huge innovations in microchips in recent years. It has also lost market share continuously due to its cumbersome structure. One of the most interesting examples is its struggle with AMD. Just 3 years ago, in 2022, Intel's market share in data centers was exactly three times that of AMD. AMD beat Intel for the first time in the last quarter. So this seems very striking to me about how Intel has regressed.
Intel is not only losing in the data center, it is also losing in personal computers and laptops right now. There is still a very high market share there, around 76% in CPUs. But there are two competitors, one of them is Apple. Apple now produces its own chips. Apple calls them silicon and they are very successful. On the other hand, there are chips designed by Qualcomm. These are arm-based. They are also doing very well right now and it is estimated that Intel will decline in the market here in the coming days. It is possible that this decline will also be reflected in the gaming market. Intel was actually a traditional strong player in the PC gaming market, but devices such as Steam Deck and Lenovo Legend Go, which use AMD processors, have started to take a serious share from Intel. Here again, Intel seems to be in trouble.
The article I mentioned earlier reveals one of the reasons why Intel has fallen behind in competition is its vertically integrated structure. Intel is a more traditional company, it used to design, produce and distribute its microchips itself. It even used to place them in customer data centers itself. Now, this system has changed a lot. Companies like Nvidia and ARM only design chips. Companies like TSMC only manufacture them. Companies like SMCI and Dell manage data centers and develop software for them. There is such a dispersed structure right now. The great advantage of this dispersed structure is flexibility. Because thanks to this, when a new need or a new technology emerges, very fast designs emerge and these designs are transformed into new products very quickly thanks to the collaborations with manufacturing companies. Intel's vertical structure cannot keep up with this speed. The collaborations between units do not work at this speed. Remember, as the organization grows, it becomes more difficult to manage, I think.
On the one hand, Intel's culture is of course an old one. I believe that culture also creates obstacles, and perhaps most importantly, I am not sure that Intel has the highest quality workforce. Because think about it, the engineers at Nvidia have become millionaires. Because Nvidia had stock options. On the other hand, let alone making people rich with stock options, Intel has now reached a point where it cannot even distribute dividends. In this case, I have doubts about whether the highest quality engineers are working at Intel. In other words, this does not seem like a cycle that can be easily broken and returned to me.
What is worse is the attitude of the Intel board of directors. The Intel board of directors fired the previous CEO. In fact, he was a CEO I liked. I had also made a small investment in Intel at the beginning of 2024, trusting that CEO. I thought it could be a comeback story. Unfortunately, it did not work. I also cut ties after the first quarter's balance sheet. Then Intel sent this CEO away and brought in two interim CEOs. I think this is also very bad. Because think about it, the company needs a very serious transformation but there are two interim CEOs there. You need to evaluate how this will affect the employees, how the employees will believe in the company, all these.
One of the famous comeback stories is Apple. After Steve Jobs leaves, Apple goes very bad and then they bring Steve Jobs back as the CEO and he turns the company around. Because he makes very radical decisions. He literally goes through the company's product lines. He reduces the number of products, the number of markets he goes to, he completely changes the design. CEOs with that determination are needed for such transformations. Frankly, I don't think these two interim CEOs can solve this problem either.
Another effort by Intel is to simplify, simplify, they actually want to focus more on production right now. They want to compete with TSMC in the factories that produce microchips. But this is also a very difficult transformation. Intel made a loss of 16 billion dollars in the last quarter. The American government has a lot of incentives in this regard. So I don't think Intel is a company that will go bankrupt. The American government wants there to be an American microchip manufacturer to compete with TSMC. Although TSMC has now opened a factory in America and is also very productive. This has also become a problem for Intel. But I still believe that the company has a high probability of continuing to crawl without going bankrupt, and I am skeptical about whether they can make this drastic transformation with a structure with two temporary CEOs.
What does the company's balance sheet tell us while all this is happening? According to the latest figures for September 2024, it made a turnover of 13 billion 284 million. There is a turnover, a decline in turnover, below last year. Gross profit was 5 billion 293 million, which is again a gross profit below last year. These are not good signs at all. The main operating profit was realized as a loss of 139 million dollars. The company had a profit of 1 billion 443 million in the same quarter last year in its main operations. The net loss was 16 billion 989 million. In the same quarter of the previous year, it was 310 million. Of course, there is an item called unusual items here. They did a cleanup of the past. They deleted some inventory, they deleted their receivables. This extra big loss comes from all of these. But even if you put it back, the company is still in loss.
When we look at cash flow, things don't seem to be going well there either. There is a positive cash flow of 4 billion dollars from main activities. However, when we include investments and other payments, the net cash change looks like 2 billion 502 million. So this is another aspect of the company that I don't like. When we look at the balance sheet, it has 24 billion dollars in cash. It also has 5 billion dollars in receivables. Thus, the total of its current assets is 46 billion. On the other hand, its current liabilities are around 35 billion dollars. In other words, this is not a company that will go bankrupt anytime soon, but the deterioration in its financial statements continues.
So, what is my final decision about Intel? Intel is of course a well-established company, it may recover one day, but I am not sure if there will be such a radical change in a company with two temporary CEOs. I always think, why push ourselves so hard? If you are going to invest in artificial intelligence and microchips, there are companies. For example, AMD is one of them. A stock that I saw well in 2025 had a very bad 2024. I was claiming that AMD should be avoided throughout 2024. Now my view is changing.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
