Intel Dodges Investor Lawsuit Over $32B Stock Crash

A Historic One-Day Collapse

In one of the most dramatic market downturns in recent tech history, Intel Corporation faced a staggering 26% drop in its stock value on August 2, 2024, erasing $32 billion from its market capitalization in a single day. The crash followed the announcement of 15,000 job cuts and the suspension of dividends, moves aimed at offsetting massive losses in its ambitious foundry venture. In response, a group of shareholders filed a lawsuit alleging that Intel had misled investors by hiding financial troubles. However, a federal judge has now ruled in Intel’s favor, dismissing the case permanently.

The Core Allegation: Concealing Losses in Foundry Operations

At the heart of the lawsuit was Intel’s relatively new foundry business — a strategic pivot launched in 2021 to manufacture chips for other tech giants such as Amazon and Qualcomm, in addition to Intel's internal production. Shareholders claimed Intel misrepresented the financial health of this division, particularly by failing to disclose a $7 billion operating loss for fiscal 2023 in a timely manner.

Investors alleged that this lack of transparency artificially inflated Intel's share price between January and August 2024, and that the eventual revelation led to the severe market correction.

The Court’s Reasoning: No Evidence of Fraud

U.S. District Judge Trina Thompson, who presided over the case in San Francisco, disagreed with the plaintiffs. In her 21-page ruling, she acknowledged the concerns of shareholders but stated that Intel had communicated clearly that its foundry segment would not present full financial transparency until 2024. Thus, the judge found no basis to claim that the company had issued misleading or deceptive financial statements.

Thompson further explained that Intel’s “trial-and-error” framing of the foundry venture implied an evolving business model subject to risks — including unexpected losses. Publishing unaudited or early-stage data, the judge noted, might have been even more misleading to investors.

The case had been previously dismissed once in March, but the latest ruling closes the door for good. The dismissal "with prejudice" prevents the plaintiffs from re-filing the suit.

A Broader Context: Intel’s Ongoing Struggles

Beyond legal battles, Intel has faced significant operational headwinds in recent years. Despite its legacy as a semiconductor giant, it has fallen behind industry leaders like Nvidia, AMD, Samsung, and TSMC, particularly as demand for AI-related chip technologies surges.

The foundry unit, intended to help Intel regain relevance and compete on a global scale, has so far proven financially burdensome. The $18.8 billion net loss in 2024 marked Intel’s first full-year loss in nearly four decades, underscoring the scale of the challenge it faces in transforming its business model.

Legal Relief, But No Strategic Respite

While the court’s dismissal spares Intel from a costly legal distraction, it does little to resolve the underlying issues weighing on the company. The foundry business — once seen as a game-changer — remains a financial sinkhole. Competitors continue to outpace Intel in innovation and market share, especially in the booming AI sector.

The ruling may close one chapter, but for Intel, the larger battle is ongoing: regaining investor trust, executing on long-term strategy, and proving that its high-risk bets can still pay off in a rapidly evolving tech landscape.

(With agency inputs)