00:00 Speaker A
Intel is outperforming the broader market year to date, up around 19%, but when you zoom out, you see a completely different story. Intel used to be the big player in the computer chip space, but it’s since fallen behind, particularly when it comes to the AI boom. Many investors say Intel missed the AI transition while companies like Nvidia and AMD forged ahead. Intel is down around 60% over the past 5 years. That compares to Nvidia’s 1,000% plus record run. Seven months ago, Lou Basanez, Prairie Operating EVP of market strategy, joined Julie Hyman on Yahoo Finance’s Goodbye or Good Buy, cautioning against Intel. Take a lesson.
00:40 Julie Hyman
If you knew nothing about this company at all, if you knew didn’t know what it was, and you looked at the chart, you might think,
00:46 Lou Basanez
Yeah.
00:47 Julie Hyman
Maybe it’s getting to a bottom?
00:49 Lou Basanez
No, I’d think a penny stock that’s going to bankruptcy. So.
00:51 Julie Hyman
Wow, all right. Well, but so there’s we just don’t know what’s going to happen with Intel.
00:57 Lou Basanez
It is. Turnarounds always take time, especially when you have to bring in a second turnaround leader. Uh it’s not something where I think you want to put your capital when you have other opportunities out there that have a much more clear cut path uh to get to that turnaround. So, yeah, it can be attractive and compelling, but you know, when’s the last time you really heard anything buzzy about Intel inside? It’s just not. It’s one of those legacy brands that everyone knows, household names that aren’t household investments anymore.
01:22 Speaker A
All right, Lou, seven months later, we forced you to watch yourself back.
01:28 Lou Basanez
I know, I’m just glad I’m not wearing the same jacket because that would have been embarrassing.
01:31 Speaker A
Well, Intel up 20% now. Do you still stand by that skepticism?
01:35 Lou Basanez
I do. So that was the beginning of December. So it’s it’s down about 2% since then. I think what strikes me looking back seven months later is that there are other opportunities out there, right? So I made the right opportunity cost allocation. I just don’t think that it’s going to ever be a leader. Now, you don’t have to be the leader to actually make profits from AI. I don’t think it’s a zero sum game. But for me, Intel, it’s still in a turnaround phase, right? I mean, the most rallies have happened when they announce layoffs, which is just counterintuitive, right? I want to own stocks that are announcing positive fundamental growth, positive business developments. Um I’m not looking to can you cost cut your way to being relevant again, and I just it’s just not there for me. I think there’s just other opportunities. Do I think the company is going to be doomed and never succeed? No, not at all. It’s a very solid company, strong leadership. They have a legacy business that will find its way and its footing in here. The foundry is really attractive to me if they spin it out. I think that makes it a real interesting story at that time. I’d I’d reconsider it then. Um but yeah, I’m I’m okay not owning Intel still.
02:47 Speaker A
Okay, well, speaking of spinning out, they are spinning out its artificial intelligence arm. This is going to be known as RealSense, so a bet on physical AI. I mean, how do you view this move, especially as an Intel skeptic?
03:02 Lou Basanez
Why spin out what could be your biggest asset, right? I think I would lean into that and say like, we’re moving more into AI. Here is the, you know, the proof point of that, and and then drive that into the rest of the organization as hey, if you want to own this AI asset, you got to own Intel. So I just in that case, I don’t think it makes sense to spin out.
03:25 Speaker A
Do you think it could compete with Tesla, you know, Nvidia when it comes to robotics?
03:33 Lou Basanez
I’m not on the robotics train yet. Everyone believes that humanoid robots are going to be, you know, ubiquitous in 10 years. I just don’t see it. Uh I’m not paying $30,000 for a robot to like turn on my lights and maybe make me a coffee. Uh but I do think you’re going to get more commercial applications, industrial. We’re seeing that. Those are being deployed already. It’s about a $30 billion market that’s happening. So could Intel get into that? Yeah, I think there’s possibility. Here’s the biggest challenge for Intel. You’re huge organization innovating when you’re that big, and it’s the same thing we talk about with Apple now, right? They’re too big. It’s really they’re really struggling, and I just don’t know who wants to go work for Intel, right? We’re seeing these talent wars happening in AI with meta poaching talent. Is Intel going to back up the truck with offers of $100 million or more? I don’t know.
04:38 Speaker A
It’s not a shiny name.
04:41 Lou Basanez
Yeah, exactly.
04:42 Speaker A
Yeah. You’re right.