The hardest part of long-term investing and earning 10x or 100x returns is waiting. There are companies that generate those returns, but for a stock to 10x it first needs to double, then triple, then quadruple, and so on.
One stock that's generated a 25,210% total return (or, with dividends reinvested) since 1980 is Intel (INTC -0.34%). The chipmaker has had a rough few years but it was one of the best stocks for decades, turning a $1,000 investment to start 1980 into $252,200.
INTC Total Return Price data by YCharts.
The "Wintel" dominance
The PC era drove Intel to a tremendous scale in the 1980s and 1990s. You can see in the chart below that returns were a constant march higher for two decades as personal computing spread around the world.
INTC Total Return Price data by YCharts.
What investors should note is how long Intel benefited from the PC boom. It wasn't a year or two; it was a trend that benefited the company for more than two decades. There's something to be learned about companies leading a growth industry and why winners keep winning.
The success in PCs didn't happen by accident, either. Intel and Microsoft combined to form what was known as "Wintel," the combination of the chip and operating system that was the foundation of the PC industry that modularized around it.
A network effect developed as more users bought PCs, developers were attracted to the platform, and more users gained again. And as a platform company along with Microsoft, Intel extracted a huge amount of value.
Missing the mobile revolution
As successful as the 1980s and 1990s were, the semiconductor industry doesn't stay the same for long. The 2000s and 2010s were dominated by more customized chips and quickly advancing process equipment. The vertical integration that led to Intel's dominance was its undoing as Apple, Nvidia, Google (Alphabet), and many others designed their own chips and used outsourced manufacturing from Taiwan Semiconductor Manufacturing Company to outpace Intel's chips in a growing number of devices.
Intel still had a big presence in the data center and PC markets, but it missed mobile almost entirely because chips weren't custom and were too energy-intensive.
Intel's pivot
Over the last five years, Intel has made a necessary pivot to be a foundry -- meaning it will make chips for outside companies -- and allow its chip design business to outsource production to other foundries.
Taiwan Semiconductor is now making some of Intel's chips as Intel improves manufacturing capabilities internally. Eventually, it's possible Intel splits the business into a foundry and a chip design business, but for now management still sees opportunities as a combined business.
Separating the business into two segments allows Intel to focus on what's important for each. It's a cultural shift, but important for the future of Intel.
Take the long-term view
Business has been choppy for Intel for more than a decade. But zooming out we can see that Intel has been a wildly successful investment since 1980. Investors who can buy -- and hold -- these kinds of stocks for a long period of time can do extremely well. The ride won't be smooth, but the volatility is a price you pay for beating the market.
