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Business Insider
a day ago
- Business
- Business Insider
Intel (INTC) Investors Stay Torn Between Dead Money Doubts and Recovery Hopes
Intel's (INTC) stock has been stuck in the mud, trading at depressed, multi-year-low levels of around $22 today, all while the broader semiconductor industry is on fire, with names like NVIDIA (NVDA) and TSMC (TSM) soaring. Despite the stock appearing like a value play here, Intel's issues, such as fierce competition, a struggling foundry business, and macroeconomic headwinds, are weighing heavily. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. There are glimmers of hope, such as new AI products and cost-cutting efforts, but for now, the negatives overshadow any bullish case, making INTC a risky bet, even as a value play. Given the sorry state of affairs this stock finds itself in, I remain warily Neutral on INTC with a bearish bias. Why Intel's Stock Is Languishing Intel has been navigating a challenging period, and the bearish sentiment is far from unwarranted. AMD has steadily eroded its dominance in the CPU space, with Intel's server CPU market share falling to around 60% in 2024, down from over 80% a decade ago. Meanwhile, its foundry ambitions, aimed at rivaling TSMC, have become a financial drag. The division reported a staggering $7 billion loss on $18.9 billion in revenue in 2023, followed by another $4.3 billion in losses in 2024. The company's profit margin profile is also dismal, with gross margins at about 33% over the past 12 months, down from roughly 34%, 42%, and 45% in FY2024, FY2023, and FY2022, respectively. Geopolitical risks are another gut punch, as tariffs could further erode margin over the near to medium term. Some Reasons to Stay Hopeful Now, look, it's not all bad news. Intel's latest earnings displayed some resilience, with $12.7 billion in revenue topping estimates of $12.25 billion and adjusted EPS of $0.13, which surpassed forecasts of a break-even result. The Data Center and AI segment grew 8% year-over-year to $4.1 billion, a sign that Intel's AI pivot, including the Xeon 6 processor with a 1.9x performance leap for AI workloads and upcoming Panther Lake chips, is starting to click. Intel's also leaning into U.S. manufacturing, with $50 billion invested in domestic plants and $7.86 billion from the CHIPS Act, which could shine if U.S.-focused policies gain traction. Lip-Bu Tan, Intel's new CEO, is also bringing a fresh vibe, aiming to cut $500 million from 2025 operating expenses (down to $17 billion) and aiming for $16 billion in 2026. His push for a 'startup mindset' with less bureaucracy and more engineering could spark innovation. Intel's AI PC strategy is another potential win, with plans to ship 100 million AI PCs by year-end, assuming demand picks up. These are solid steps, but they need to deliver. Excessive Risk Suggests a Pass on INTC Despite a few encouraging signs, Intel is still falling behind in a semiconductor market that's otherwise surging. NVIDIA has a firm grip on the AI chip space, and TSMC's manufacturing edge is hard to beat. With NVIDIA's CUDA platform and Blackwell chips setting the tone, Intel's decision to outsource key products like Lunar Lake to TSMC only highlights how much ground it has to make up in its foundry ambitions. Losses are expected to persist until at least 2030, and Intel's Q2 2025 revenue guidance of $11.2-$12.4 billion fell short of the $12.82 billion consensus. Another outlook miss is likely in Q3, given macro risks, especially given the tariffs. Meanwhile, the stock's low price-to-sales ratio screams value (at 2x this year's expected sales). This is counterbalanced by a forward P/E of 78x on this year's expected earnings, which, again, reflects shaky earnings and high risk. Of course, the P/E falls to a more reasonable 29x on 2026's rebound potential to $0.80. Still, that's a high P/E ratio given the current risk Intel faces in the semiconductor landscape. Additionally, Intel's significant $28.6 billion net debt position further adds to the reasons to avoid the stock. Even if Intel manages to recover and generate noteworthy profits, it will be a while before investors see tangible capital returns, as management will likely prioritize deleveraging first. Is Intel a Buy, Sell, or Hold? Currently, analysts remain skeptical about INTC's investment case. The stock carries a Hold consensus rating, based on one Buy, 26 Holds, and four Sell ratings assigned over the past three months. Today, INTC's average stock price target of $21.60 implies roughly 5% downside potential over the next twelve months. In fact, the only bullish analyst on Wall Street is Gus Richard from Northland Securities, who expects INTC stock to hit $28 within 12 months. Intel: A Cheap Stock with a Pricey Set of Problems In short, Intel's story is one of potential buried under a mountain of problems. Yes, there are flickers of innovation and strategic pivoting, from AI PCs to domestic fabs, but execution risk remains sky-high. For every green shoot, there's a red flag, like underwhelming guidance, foundry losses, stiff competition, and debt that can't be ignored. At $22, the stock appears to be cheap, but cheap doesn't always mean it's investable. Until Intel proves it can consistently deliver on growth, profitability, and innovation, this remains a 'show-me' story in a market that rewards execution, not promises.
Business Insider
3 days ago
- Business
- Business Insider
Intel Stock (NASDAQ:INTC) Continues Slide as it Abandons AI Training
Honestly, right now, it is hard to tell whether to give chip stock Intel (INTC) credit for a newfound focus or be terrified that it is on its way to producing virtually nothing. In fact, Intel recently called it quits in the artificial intelligence (AI) training market, a move which left shareholders shaken. Intel shares dropped nearly 2% in Wednesday afternoon's trading. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. In something of a bold move, Intel departed one market to focus instead on another: inference. Specifically, Intel is now set to focus on '…edge and agent-based' inference, a move which might actually be better for Intel in the long run. Reports suggest that the inference market may ultimately surpass the training market in terms of overall value. After the Gaudi 3 chip failed to make much impact on the market, Intel instead pulled back to edge AI, agentic AI, and foundry services. Edge AI refers to both 'local' systems that do not need data center or cloud data deployments and some remote systems not connected to larger operations. Agentic AI, meanwhile, focuses on chips that can act without much, if any, human intervention. 18A Process Remains Uncertain There were some signs, first seen not so long ago, that suggested Intel may be planning to shut down the 18A process. And new reports lend at least some credence to that theory, though not a complete admission of abandonment. The new reports suggest that Intel is likely to use the 18A process to fabricate the Panther Lake line of mobile processors. But the Nova Lake processors are instead being taped-out through the N2 process from Taiwan Semiconductor (TSM). Intel was already an 'early client' for the N2 process, and it seems like it may be putting that process to work before it can get the 14A process, which was to ultimately replace the 18A process, up and running. Given some reports that suggested 18A would be used internally, as opposed to being used for foundry customers, the new revelation about Nova Lake may provide some support for that notion. Is Intel a Buy, Hold or Sell? Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 33.49% loss in its share price over the past year, the average INTC price target of $21.60 per share implies 4.21% downside risk.
Yahoo
09-07-2025
- Business
- Yahoo
Intel reportedly considering major strategy change in manufacturers like Ohio plant
NEW ALBANY, Ohio (WCMH) — Intel's new CEO Lip-Bu Tan is reportedly considering a major change to Intel's manufacturing division, including Ohio's plant. According to reports, Tan is debating a strategic change for Intel Foundry, the Intel division responsible for chip manufacturing and the $28 billion Intel Ohio One plant that is under construction. If implemented, Intel would no longer market a major service, 18A, to new external customers. Intel has indicated 18A will be used in Ohio's facilities. Intel did not confirm the reports, instead choosing not to comment on 'market rumors and speculation.' What's the effect of Governor's line-item vetoes on Ohio public school funding? 'As we have said previously, we are committed to strengthening our roadmap, delivering for our customers and improving our financial position for the future,' an Intel spokesperson told NBC4. Intel is primarily comprised of two main divisions: Intel Products and Intel Foundry. Products is in charge of marketing physical goods, and Foundry is in charge of the manufacturing of goods. Semiconductors are small and complex, so Intel Foundry explores methods of making them effectively. Ohio's plant, as a Foundry operation, plans to manufacture products made by both Intel and outside companies. Reports say Intel is considering moving away from 18A, a process node that will be ready for mass production later this year. Intel said process nodes are like a 'recipe and list of ingredients used in semiconductor manufacturing.' Intel has been promoting 18A for some time, so cutting external customers would be a big shift in the company's Foundry strategy. Instead, Intel would reportedly focus on 14A, which the company said is also being designed as a process node. Intel estimates 14A will be available in 2027, so ditching 18A would likely limit Intel from getting new external Foundry customers for nearly two years. How to get unclaimed funds in Ohio before they go to the Browns In Ohio, where construction has been delayed into 2031, it's unlikely the switch would have a direct effect, unless it is too costly and requires larger changes at Intel. Industry analysts predict the proposal would be a financially risky decision, as the company has invested billions in 18A. Analysts said the company would likely need to take a write-off if it moves forward with this proposal, costing Intel hundreds of millions or billions of dollars. Removing 18A for external customers would still leave one major customer for the Foundry: Intel Products. Intel is the largest customer for 18A technology, and the company intends to use 18A to mass produce its new Panther Lake technology this year, a new computer chip Intel believes will be the most advanced processor ever made in the U.S. It's expected that Ohio's two semiconductor fabs will use 18A technology. Intel said Ohio's plant will build the 'most advanced semiconductor processors in the U.S.,' so it's likely the New Albany plant will produce Panther Lake technology using 18A. Last week, Intel announced it will unveil its Q2 financial results on July 24, which will offer more insight into how Intel is doing. Intel confirmed it will enact substantial layoffs this summer, the details of which are also more likely to come to light with the Q2 results. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
07-07-2025
- Business
- Yahoo
Intel Risks Billions as 18A Plans Waver, TSMC Pressure Mounts
July 7 - n the latest development, Intel (NASDAQ:INTC) is weighing a fast-track pivot from its 18A foundry node to the more advanced 14A process. The shift would shelve most external 18A volumes, beyond Intel's own Panther Lake CPU, and accelerate 14A ramp-up to court customers like Nvidia (NASDAQ:NVDA). Intel has acknowledged small 18A deployments with Amazon and Microsoft, but broader adoption has lagged. Under CEO Lip-Bu Tan, Intel Foundry has pledged to listen closely to client needs and build trust, signaling a move toward a more software-driven, customer-centric model. Abandoning external 18A volumes could trigger asset impairments, as Intel depreciates foundry assets on a straight-line, eight-year schedule. Billions of dollars in capex may be at risk of write-downs. The timing adds urgency: Taiwan Semiconductor (NYSE:TSM) plans to ramp its N2 process later this year with early partners AMD (AMD) and Apple (NASDAQ:AAPL), creating pressure for Intel to keep pace on performance and scale, even if the two nodes aren't direct apples-to-apples matches. Accelerating 14A could bolster Intel's foundry appeal, but it carries execution and financial risks. The decision will test Tan's strategy to revive Intel's competitiveness. Based on the one year price targets offered by 32 analysts, the average target price for Intel Corp is $21.24 with a high estimate of $28.30 and a low estimate of $14.00. The average target implies a downside of -5.58% from the current price of $22.49. Based on GuruFocus estimates, the estimated GF Value for Intel Corp in one year is $23.86, suggesting a upside of +6.09% from the current price of $22.49. Gf value is Gurufocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. For deeper insights, visit the forecast page. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
03-07-2025
- Business
- Business Insider
Intel Stock: What Effect Will Foundry Strategy Shift Have? Morgan Stanley Weighs In
After years of lagging behind rivals like TSMC, Intel (NASDAQ:INTC) has been trying to re-establish itself as a leading chip manufacturer – not just for its own products, but as a foundry for others as well. Don't Miss TipRanks' Half-Year Sale Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Its foundry strategy has so far revolved around its 18A process node, which was originally expected to launch next year. The 18A node is the fifth and final step in former CEO Pat Gelsinger's ambitious 'five nodes in four years' roadmap – a plan designed to rapidly reclaim process technology leadership. At one point, 18A was billed as the node that would give Intel 'unquestioned leadership' in the space. On the product side, Intel's next-generation PC chips, known as Panther Lake, are expected to arrive in the second half of this year, built on the 18A process. Server chips under the Clearwater Forest line are slated for 2026, with the possibility of onboarding external foundry customers sometime later next year. However, that focus might now be shifting. According to a Reuters report that cites 'unnamed Intel sources,' the company is considering pulling back on its foundry plans for the 18A process node in order to shift resources toward its next-generation node, known as 14A. That process is expected to enter risk production next year, with internal use slated for 2027. If true, the move could result in a writedown potentially amounting to hundreds of millions – or even billions – of dollars. The report suggests Intel would still fulfil limited 18A foundry commitments it has already made, but would largely pivot its foundry strategy to 14A going forward. While it's not clear yet whether the report is true, Morgan Stanley analyst Joseph Moore believes that shifting the foundry focus to 14A wouldn't be 'economically disruptive, given low 18A expectations.' To some extent, Intel had already dialed back its ambitions for 18A, so the potential impact from the reported shift – and any associated writedown – appears 'minimal' to Moore. Even under the most optimistic outlook, prospective foundry customers were expected to start with small-scale projects to evaluate Intel's capabilities, meaning the capital tied to those efforts was always going to be modest. Management has consistently stressed that reaching breakeven on the foundry business doesn't rely heavily on external customers in the near term. 'So for 2025/26, none of this will have much economic impact,' Moore opined. That said, while the initial foundry projects were always expected to be small in scale, pushing their start out by a year or two would also delay any meaningful volume ramp. 'We are generally pessimistic about foundry contributing to profits in an investable time frame anyway, so it doesn't change our view that much, but we can see why foundry optimists saw this as a negative,' Moore said on the matter. And while Moore sees the value in Intel, he shares CEO Lip Bu Tan's view that this is a 'long path to recovery.' Accordingly, Moore stays on the INTC sidelines for now, maintaining an Equal-weight (i.e., Neutral) rating and $23 price target, suggesting the shares are fully valued. (To watch Moore's track record, click here) 25 other analysts join Moore on the fence while 1 Buy and 4 Sells can't alter a Hold consensus rating. Going by the $21.35 average target, a year from now, shares will be changing hands for a 5% discount. (See Intel stock forecast) To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
