Financial numbers tell the story of Intel’s decline
In his 1996 book, Only the Paranoid Survive, the then-Intel chief executive Andy Grove emphasized the importance of paranoia and constant vigilance in the technology industry. He argued that companies must be constantly looking over their shoulders, anticipating and adapting to change, or risk being left behind.
Unfortunately, Intel seems to have ignored Grove’s advice in recent years. The company has struggled to keep up with the competition, particularly in the cloud and the mobile chip market. As a result, Intel’s market share has declined and its stock price has plummeted.
The company’s financial decline can be tracked by evaluating key financial indicators. One is return on investment capital (ROIC), which is a proxy for cash flow and a good indicator of the overall health of a company. As recently as 2020, Intel’s ROIC was 20.5%. By 2024 it had fallen to 0.2% – a 99% decline.
A similar picture emerges when you look at the company’s operating margin. In 2020, it was 30.6%, but by 2024 it had fallen to just 0.2%. Similarly, to generate one dollar of revenue in 2020, Intel had invested $1.31. But in 2024, to generate the same dollar of revenue, it had to spend $2.27 – a 73% increase.
To summarize, Intel is spending a lot more to make a lot less. And as its returns have been driven down, the stock price has tumbled. Intel’s stock fell to just $20.05 at the end of 2024, from $40.54 five years earlier.
Missed opportunities
The sad truth about Intel’s current plight is that lessons from Kodak, Blockbuster and other disrupted companies were ignored.
When Apple introduced the iPhone, Steve Jobs asked Intel to make the chips. Intel declined. In the early 1990s, Intel abandoned entry into the dedicated graphics processing unit (GPU) market, ceding it to Nvidia and AMD. This technology has become the backbone of cloud computing and AI – and propelled Nvidia to a market capitalization of some $3.3 trillion as of mid-January 2025.
From 2015, Intel also had delays with its manufacturing processes and improvements. Rivals such as TSMC, AMD and others surged ahead with more efficient technology. And in 2017-2018, Intel had an opportunity to take a substantial stake in OpenAI – then still a fledgling non-profit. Intel’s leadership decided against it. In October 2024, OpenAI was valued at $157 billion.
Looking to the future
When I teach Duke CE’s Agile Dashboard program, we discuss the importance of looking externally and understanding future market trends, rather than focusing on the past. Three lessons emerge from Intel’s decline.
The first is to follow Andy Grove’s advice and stay productively paranoid. Businesses should never become complacent. Regardless of current success or market dominance, the risk of stagnation and obsolescence is always present. Companies must continuously innovate beyond their core offerings.
The second lesson is to anticipate the future. As ice hockey great Wayne Gretzky put it, “skate to where the puck is going to be,” not where it has been. In other words, prepare for future trends and demands rather than reacting to current circumstances. This requires leaders to be forward-thinking and strategic.
Third, maintain an external focus. As Matt Garman, CEO of Amazon Web Services, has suggested, leaders need to “look around corners” to identify potential market shifts and disruptions before they happen. A proactive approach to understanding external challenges is key to staying ahead of competitors.
Intel’s decline is a cautionary tale for any company. It shows that even the most successful companies can be brought down by complacency and a lack of innovation.
Intel needs to rediscover Grove’s advice and become more paranoid if it wants to survive its current competitive threats. In all likelihood, you do too.
Professor Joe Perfetti is an innovation fellow at Duke Corporate Education and an adjunct faculty at the University of Maryland, College Park
