Imagine a company that has enjoyed overwhelming success in its key markets for ages, and also claims one of the most valuable and recognizable brands in the world. Indeed, this company is so important to both its sector and the broader economy that it's been a component of the Dow Jones Industrial Average for nearly a quarter of a century.
One would expect shares in this blue chip company to have been an outstanding buy-and-hold bet. And to be fair, for a good long while, they were.
But that was then and this is now.
Unfortunately, the Dow Jones stock we're talking about is Intel (INTC).
True, shares almost doubled in 2023, helped by a multi-billion-dollar cost-cutting campaign and the generalized euphoria surrounding all things AI. Intel bulls harbored hopes that last year marked an inflection point for the long-time market laggard.
Alas, it hasn't worked out that way in 2024. Intel stock lost more than half its value for the year to date through the end of October. That trailed the broader market by nearly 75 percentage points.
It's hard to believe now, but once upon a time INTC was one of the best stocks on the planet. Cut to the present, and it's not clear what it will take to return the company to its glory days of yore.
True, Intel still dominates the markets for central processing units (CPUs) for PCs and servers, but it's been losing share to rivals at an accelerating rate for some time. Nvidia (NVDA) and Advanced Micro Devices (AMD) are just a couple of its formidable competitors.
Where the semiconductor company really went wrong – apart from execution missteps and manufacturing delays – is the way it missed out on some of the biggest changes in technology. Intel famously whiffed on mobile, and now Nvidia is already running away in generative artificial intelligence (AI).
It's been a curious ride for INTC investors. Thanks to its dot-com era heyday, Intel was one of the 30 best stocks in the world between 1990 and 2020. Over those three decades, INTC stock generated more than $340 billion in wealth for shareholders, or an annualized dollar weighted return of 16%, according to Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University.
Alas, the past two decades of that 30-year span have been another story entirely.
The bottom line on Intel stock?
If you go all the way back to Intel's debut in the early 1970s as a publicly traded company, it beats the broader market handily. The chipmaker's annualized all-time total return (price change plus dividends) stands at 14.9%. The S&P 500's annualized total return comes to 10.5% over the same span.
Sadly, if you look at pretty much any other standardized period, an investment in INTC has been a major dud.
Intel stock generated negative annualized total returns over the past one-, three-, five- and 10-year periods. And it trails the S&P 500 by distressingly wide margins over the past 15- and 20-year periods.
What does this sort of performance look like on a brokerage statement? Nothing short of ugly.
Have a look at the above chart and you'll see that if you invested $1,000 in Intel stock 20 years ago, today your stake would be worth less than $1,700 – or an annualized total return of 2.6%.
The same amount invested in the S&P 500 would theoretically be worth about $7,500 today – an annualized total return of 10.5%.
As illustrious and iconic as the Intel brand may be, Intel stock has been nothing but a sinkhole of opportunity cost for buy-and-hold investors for a very long time.
