Is Breaking Up Intel The Right Move? + The New Gold Rush
Feb 24, 2025
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Josh Brown, Co-founder and CEO of Ritholtz Wealth Management, shares insights on the potential breakup of Intel and its leadership challenges. He emphasizes the need for visionary leadership in the tech industry. The conversation also tackles the recent surge in gold prices amid geopolitical tensions, with a critical look at whether gold is a smart investment compared to stocks. Josh highlights the risks of companies adopting Bitcoin strategies and the implications for the housing market.
January's housing data indicates a significant decline, yet some regions see a 24.9% increase, showcasing market disparities.
Intel's declining status in the semiconductor sector highlights the need for visionary leadership to navigate strategic realignments.
Gold's recent surge amid geopolitical tensions sparks debate on its investment value versus long-term performance against stocks.
Deep dives
Housing Market Challenges
U.S. housing starts declined by 9.8% in January, primarily due to adverse weather conditions and high mortgage rates. Builders are slowing down construction due to increased costs from labor shortages and tariffs, alongside an ongoing inventory crisis. A closer look reveals that while national figures appear grim, certain regions are experiencing a 24.9% increase in home building, indicating a disparity in market conditions across the country. Investors are encouraged to watch for potential recovery in mortgage rates and improved seasonal construction activities that may boost housing stocks.
X Valuation and Advertising Landscape
The valuation of X, formerly Twitter, at $44 billion raises questions concerning its actual worth, especially given its recent valuation at just $10 billion by Fidelity. The conversation highlights the unpredictable nature of advertising revenue for such social media platforms and the influence of Elon Musk's persona on investment interest. With major advertisers previously fleeing the platform, there is speculation that a shift in the political landscape may prompt their return, presenting new opportunities for the company. Analysts caution against investing in X when many established advertising options are available without associated risks.
MicroStrategy's Bitcoin Strategy
MicroStrategy's decision to significantly invest in Bitcoin has sparked interest among other companies, which appear to adopt similar strategies during challenging times. However, this commoditization of Bitcoin by publicly traded firms raises concerns about the long-term sustainability of such a play, often resembling past trends where struggling companies adopted flashy tech terms to boost valuations. The potential consequences of saturation in the market could diminish the perceived value of holding Bitcoin as corporate assets increase in number. Observing this trend suggests that both MicroStrategy and its imitators may face scrutiny regarding the legitimacy and viability of their approaches.
Intel's Downward Spiral
Intel's struggle to maintain relevance in the semiconductor industry has led to considerable speculation about the company's future amidst proposed breakups involving TSMC and Broadcom. A history of mismanaged strategic decisions, particularly the shift towards a foundry model, combined with internal leadership issues, has resulted in a catastrophic decline from its previous standing. The emergence of competing firms, particularly those focused on parallel processing, has further accentuated Intel's falter on the technological frontier. Analysts suggest that a separation of its core businesses might be the necessary step for current shareholders to salvage something from its rapid decline.
Gold's Status Amidst Geopolitical Tensions
Gold is witnessing a surge as investors flock to safe-haven assets due to rising geopolitical tensions, with prices soaring amid inflation fears and tariff threats. Despite historical patterns showing volatility in gold prices regardless of socio-political climates, this current momentum stems from central banks reassessing their currency reserves in light of potential global upheavals. While gold has underperformed stocks over the long term, periods of market uncertainty have reignited interest, leading to speculation about its future performance. The conversation reflects a broader debate about the practicality of gold as an investment in contemporary times, particularly in extreme scenarios where tangible assets may hold more value.
Ed and Josh Brown, co-founder and CEO of Ritholtz Wealth Management, open the show by discussing January’s housing starts data, X’s latest funding round, and the growing wave of companies emulating MicroStrategy’s approach to bitcoin. Then Josh unpacks the potential breakup of Intel. He breaks down how Intel’s leadership struggles led to its decline and explains why having a true visionary at the helm is crucial for a chip company. Josh and Ed also break down gold’s record-breaking surge and explain why banks are rushing to fly the commodity into the U.S. Ed questions whether gold is really a smart investment, while Josh explains why owning it outright might not be as valuable as people think.
