Intel Eyes NEX Exit While Broadcom Tightens AI Chip Grip
May 30 - Intel (NASDAQ:INTC) is weighing a potential exit from its Networking and Edge (NEX) division, a move that could sharpen its focus on core CPU markets.
NEX, which includes networking gear and edge-computing chips, brought in $5.8 billion in revenue during 2024, or about 11% of Intel's total sales. Despite growing 20% in the fourth quarter and posting a 16% operating margin last year, the unit is under strategic review as Intel redirects efforts to defend its leading position in PC and data center processors.
Warning! GuruFocus has detected 7 Warning Signs with INTC.
The company's overall CPU market share has slipped from 80% in 2015 to 60% in 2024, with Advanced Micro Devices (NASDAQ:AMD) gaining ground. Intel still controls 68% of the PC CPU market and 55% in data center CPUs.
Broadcom (NASDAQ:AVGO) appears to be a major pressure point. Its dominance in networking chips, including its Tomahawk line for AI data centers and Jericho chips for telecom, has reportedly contributed to Intel's decision to retreat from NEX.
Broadcom's networking products now represent about 30% of its $12.3 billion in AI revenue. That edge, plus the ability to offer both switching and NIC hardware, may be crowding Intel out of the space.
Based on the one year price targets offered by 32 analysts, the average target price for Intel Corp is $21.31 with a high estimate of $28.30 and a low estimate of $14.00. The average target implies a upside of +7.29% from the current price of $19.86.
Based on GuruFocus estimates, the estimated GF Value for Intel Corp in one year is $23.65, suggesting a upside of +19.05% from the current price of $19.86.
This article first appeared on GuruFocus.
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