The semiconductor industry remains a key driver of global technological advancement, providing the backbone for everything from AI and cloud computing to industrial automation and consumer electronics. However, despite its long-term growth potential, several semiconductor stocks underperformed significantly in 2024 due to macroeconomic challenges, supply chain disruptions, and geopolitical tensions. Among them, Intel Corporation (NASDAQ: INTC) emerged as the most oversold semiconductor stock, recording a staggering 58% drop in its share price.
The State of the Semiconductor Industry in 2024
In 2024, the semiconductor sector faced a mixed performance, with companies operating in AI and data center markets seeing strong demand, while those in legacy markets like consumer electronics and traditional automotive semiconductors struggled. The broader Philadelphia Semiconductor Index (SOX) returned 19.2% for the year, underperforming the S&P 500 Index’s 23% return.
Stacey Rasgon, Managing Director at Bernstein Research, noted in a mid-2024 CNBC interview that U.S. semiconductor companies faced additional headwinds from regulatory restrictions and geopolitical uncertainty. Meanwhile, Deloitte’s 2025 semiconductor outlook described this divergence as a “tale of two markets,” where AI-focused chipmakers thrived while legacy semiconductor businesses lagged.
Intel’s Struggles and Market Performance
Intel Corporation (NASDAQ: INTC), a once-dominant player in the semiconductor space, has been consistently losing market share to competitors like Advanced Micro Devices Inc. (NASDAQ: AMD). Despite implementing an aggressive turnaround strategy, execution challenges and stiff competition contributed to Intel’s 58% stock decline in 2024.
However, 2025 has started on a positive note for Intel, with the stock rebounding by 28%. This resurgence is largely driven by speculation surrounding strategic options, including potential divestitures and restructuring plans. Notably, on February 15, Bloomberg reported that Taiwan Semiconductor Manufacturing Company (NYSE: TSM) was considering acquiring Intel’s U.S. manufacturing facilities. This move aligns with the Trump administration’s push to enhance American semiconductor manufacturing. However, Reuters later reported that some U.S. officials raised concerns about a foreign entity taking over Intel’s domestic factories, leaving the discussions in limbo.
Hedge Funds and Institutional Interest in Intel
Despite its poor 2024 performance, Intel remains a key focus for hedge funds, with 83 prominent funds holding positions in the company as of Q4 2024. Investors appear to be betting on a turnaround, potentially fueled by restructuring initiatives, government incentives, and Intel’s ability to pivot towards high-growth markets like AI and data centers.
Where Does Intel Go From Here?
While Intel’s recent stock rally suggests renewed investor interest, the company still faces execution challenges that could limit sustained growth. For investors seeking exposure to the semiconductor sector, AI-focused chipmakers may present a more compelling opportunity. Our latest research identifies an AI stock that trades at less than five times its earnings, offering immense upside potential compared to Intel.
With semiconductor stocks navigating a turbulent 2024, investors must differentiate between short-term rebounds and long-term growth narratives. While Intel tops the list of the most oversold semiconductor stocks, the future of its recovery hinges on strategic execution and broader market trends.
