Intel Stock’s Tumultuous Journey: A Call for a Nvidia-Like Comeback
Intel Corporation has seen better days, and there’s no denying it. Since taking the reins as CEO on February 15, 2021, Pat Gelsinger has overseen a dramatic decline in the company’s stock, marking a staggering 63% drop from $61.81 to just $22.68 as of the last close. It’s hard not to feel that the leadership has yet to meet expectations, and the clock is ticking to deliver results akin to the meteoric rise of competitor Nvidia.
Gelsinger’s Trials and Tribulations
The stark reality for Gelsinger is that with shares sliding, he stands to lose more than $100 million in paper value due to performance-based equity awards tied to Intel’s stock performance. Despite his prior success at VMware, Gelsinger’s recent stewardship has been rocky, culminating in Intel stock’s 55% year-to-date loss in 2024, putting immense pressure on his ability to deliver long-term value to shareholders.
Compensation and Results: A Mixed Bag
Intel’s executive compensation package is particularly noteworthy in this context. Gelsinger’s original offer included a base salary of $1.25 million, with potential bonuses and stock awards pushing his total compensation well over $110 million if certain performance metrics were met. However, despite achieving a cash bonus of $4.9 million in 2021, his subsequent cash bonuses have diminished, highlighting a troubling trend of corporate disappointment.
In 2022, Gelsinger’s bonus plummeted to $945,900, marking a significant decline as the stock crashed. Even his performance stock units (PSUs) designed to reward strong shareholder returns were forfeited due to subpar performance metrics. If the company doesn’t recover its stock price substantially—triggering awards worth tens of millions—Gelsinger’s compensation package could turn into a complete wash-out.
2023: A Brief Resurgence
Despite the setbacks, 2023 provided a brief respite, witnessing a 90% spike in Intel stock, largely attributed to positive earnings growth and optimism regarding Intel’s Foundry strategy. However, disappointing guidance and fallout from the ongoing semiconductor crisis sent shares spiraling back down, negating much of the previous gains. Now, as we near the end of 2024, Intel is struggling to maintain any upward momentum, and the stock sits comfortably below the highs expected just months ago.
Comparing Intel to Nvidia: Apples to Oranges?
The success of Nvidia looms large over Intel’s current trajectory. Nvidia’s stock surged a jaw-dropping 557%, and yet, all eyes are on Intel to replicate that success. To meet their lofty performance targets and avoid losing equity awards, Intel’s stock would need to hit dizzying heights: $148.95 within a defined period. For context, to even just achieve a 185% increase, significant restructuring and strategic pivots are essential. This level of growth seems far-fetched given the company’s recent performance.
Future Outlook: Is Redemption Possible?
The upcoming third-quarter earnings report due on Halloween night will be crucial for determining if Intel can course-correct its current trajectory. With the market awash in skepticism and the competition heating up, unless Gelsinger can deliver real results—comparable to Nvidia’s well-executed strategies—this might mark a permanent decline for a once-great American institution.
Intel’s historical dominance in the semiconductor market is under severe threat, and the question lingers: Can Gelsinger lead the company back to its rightful place as a heavyweight contender? A return to strong growth is not just imperative for shareholders; it is critical for restoring faith in an American tech giant grappling with existential challenges. The path to recovery is steep, but nothing less than a decisive turnaround will suffice.
