American businesses running afoul of European regulators is not new, and for chip stock Intel (INTC), it was basically just their turn. And now, Intel is taking on the regulators in Europe over a nine-figure fine, and investors are happy to see Intel fight back. Sufficiently so that investors sent Intel shares up fractionally in Friday afternoon’s trading.
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Intel faces a $421.4 million fine, reports note, which it drew from a court case that took place two years ago. At the time, Intel was accused of “excluding rivals from the market,” and acting in a fashion that was both “disproportionate and unfair,” reports noted. The case started back in 2009, and Intel already managed to talk the General Court into cutting the penalty—then 1.06 billion euros—out in 2022.
However, judges took another look at the case, and brought back some of the fine—around 376 million euros—for making payments to several competitors to delay the release of some of their products. Such a move is known as a “naked restriction,” reports note, and regulators generally do not approve. However, Intel is arguing that the fine that resulted did not factor in that Intel’s actions were comparatively limited, and connected to a handful of its competitors. Because of these “narrow, tactical moves,” Intel argues, the fines should be lessened further.
Fighting Back Against AMD
Meanwhile, Intel is not just fighting governments. It is also working to fight back against Advanced Micro Devices (AMD), one of its key rivals. We saw, in the first quarter, that Intel lost ground in both desktop and server markets, and Intel wants to turn that around. This comes as a surprise to very few, of course, but the effort is still coming on strong.
And Intel will have a lot of fighting to do, too; AMD has been gaining in several key points, including the artificial intelligence (AI) PC market. And with AMD taking up a larger share of several key markets, it will be tough for Intel to come back. One note of hope, however, is that both Intel and AMD actually shipped fewer processors overall in the first quarter than they did in the quarter preceding it. So Intel is not so much losing shipments as it is losing market share in a market that is declining a bit, likely due to economic pressures.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 25 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 32.3% loss in its share price over the past year, the average INTC price target of $21.23 per share implies 1.85% downside risk.
