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Intel Wins Lawsuit Over Foundry Losses, $32 Billion Market Drop

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Intel has successfully defended itself against a shareholder lawsuit that accused the company of fraudulently hiding issues within its foundry business, which led to significant financial losses and a $32 billion drop in market value in a single day. The lawsuit stemmed from Intel’s failure to immediately disclose a $7 billion operating loss in its foundry business for the fiscal year 2023, which wasn’t revealed until April 2024.

U.S. District Judge Trina Thompson, in a decision made public on Tuesday, dismissed the claims, ruling that shareholders had incorrectly linked the $7 billion loss to Intel’s Foundry Services business. The judge further noted that statements made by former CEO Patrick Gelsinger regarding the company’s “significant traction” and “growing demand” for its foundry services were not misleading, as they referred to specific customers, not the overall revenue, which had been declining.

The lawsuit had accused Intel of inflating its stock price from January 25 to August 1, 2024, during which time the company posted a quarterly loss of $1.61 billion, announced layoffs of more than 15,000 employees, and suspended its dividend to save $10 billion in 2025. As a result, Intel’s stock price dropped by 26% the following day, causing a loss of $32 billion in market capitalization.

The Santa Clara-based company, which has faced growing competition from chipmakers like Nvidia, AMD, Samsung, and TSMC, has struggled to capitalize on the artificial intelligence boom. Intel ousted Gelsinger as CEO in December.

The case, titled In re Intel Corp Securities Litigation, was filed in the U.S. District Court for the Northern District of California.

Quantum Computing Stocks Drop After Nvidia CEO’s Dismal Outlook

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Quantum computing stocks experienced a significant decline on Wednesday, halting a year-long rally, after Nvidia CEO Jensen Huang predicted that practical quantum computers are still two decades away. This stark timeline casts doubt on the future of the sector, which had seen optimism due to early-stage breakthroughs but is still far from achieving widespread commercial success.

Huang suggested that while the technology shows potential, “very useful quantum computers” are likely 15 to 30 years away, with 20 years being the most plausible estimate. This forecast contrasts with the rapid growth of the quantum computing industry in recent years, driven by high-profile developments like Google’s December breakthrough in the field.

Stocks of companies like Rigetti Computing, D-Wave Quantum, Quantum Computing, and IonQ plunged by more than 40%, collectively losing over $8 billion in market value. The decline reflects the industry’s current struggle with niche applications and the massive investment needed for future progress. Despite the steep drop, Ivana Delevska, chief investment officer of Spear Invest, which holds shares in Rigetti and IonQ, stated that the 15 to 20-year timeline seems realistic, mirroring the trajectory Nvidia followed in developing accelerated computing.

Despite the long road ahead, quantum computing remains a key area for national security, with governments counting on its potential for military applications, particularly in decryption technology. However, the current revenues of these companies are minimal, with IonQ, valued at over $10 billion, projecting $41.6 million in revenue for fiscal 2024, and Rigetti, valued at $4.4 billion, expected to generate just $11 million in the same period.

Analysts, like Richard Shannon from Craig-Hallum, suggest that while these companies are far from profitable, their future revenue growth, particularly from government contracts, is crucial to their long-term potential. Shannon also noted that while quantum computing may disrupt traditional computing, it could ultimately benefit Nvidia, a major player in the accelerated computing space.