Changes are already happening faster than in previous years and it is becoming quite difficult to keep up with it. Large companies are in a very difficult situation in this regard. Big investments, long-term strategies, plans. It is extremely difficult for large companies to change these things quickly and flexibly. The most difficult thing is to make a decision. Yes, making the right decision is the most important step. In this article, I am writing about two decisions: Intel's decisions and the decision of the State Oil Fund of the Republic of Azerbaijan (SOFAZ), which bought shares from it.
What's happening at Intel?
The main pillars of the AI industry are chips and video cards. Intel also has a large stake in this industry. GPU is more important for artificial intelligence. Intel preferred to stick to tradition and produce CPUs. This is not the only wrong decision. The biggest mistake in Intel's history is that it refused to invest in the OpenAI startup. Sources who spoke to Reuters said that the heads of the two institutions held meetings about this in 2017-2018. two options were discussed: a $1 billion investment for 15% of OpenAI, and cost-effective manufacturing of devices for 15% of OpenAI. At the end of the discussions, Intel rejected the proposals and chose to follow its traditional path. The bitter consequences of this are already in sight. With this, he began to lose competition with Nvidia, which saw the development in the field of artificial intelligence. After that, Intel began to lose value. As a result, Intel shares lost 59% in the last 6 months (March-September 2024).
For comparison, Intel's market value in 2017 was $216.02 billion, and Nvidia's market value was $117.26 billion. Now in 2024, these figures are 80.77 billion dollars and 2.522 trillion dollars, respectively. Also, OpenAI has a market value of $100 billion.
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Risky investment of SOFAZ
The worst case in this valuation, or rather the case that affects us, is SOFAZ buying shares in Intel. On April 27, 2024, SOFAZ announced that it owned $31 million worth of Intel stock. On that date, the share price was 31.36 dollars, now this figure is 18.89 dollars. If SOFAZ still held these shares, and did not sell when the shares rose to $34 in July, it appears to be at a loss on this stock. That is, the 31 million dollars invested is currently approximately 19 million dollars.
I should also mention that SOFAZ invested in other shares as well. The State Oil Fund reported that in the first quarter of this year, the total amount of shares of TOP-5 companies was 1 billion 742 million dollars.
- "Microsoft" (494 million US dollars)
- "Apple" (419 million US dollars)
- "NVIDIA" (US$ 371 million)
- "Amazon" (279 million US dollars)
- "Meta platforms" (179 million US dollars)
