Every once in a while opportunities like intel come along where a previous tech market leader loses strength and the market overreacts and drives the price down way too much.
Mainstream media latches on, calls the end of the company, tech YouTubers and the HN comment section follow suit. Price further falls to ridiculous lows and becomes a screaming value buy.
It doesn’t happen often, but when it does it’s a great opportunity. There are of course exceptions (Kodak comes to mind) but a company like Intel when we are going through perhaps the largest ever compute and processing demand surge was just silly.
The Foundry lost over $2B this quarter. If it keeps losing that much, they're on track to lose $8B this year. When they first segregated the Foundry P&L, $8B/year loss was what they announced. And that caused the price to tank from $50 down to almost $25.
They said their plan was to break even in 2027 (2028 if we're being generous). They've made almost no progress on that front.
Their revenue is about the same as then.
Their products are as what was expected back then (as in, they're good, but they had planned them to be about this good by this point in time). None of the recent news (Terrafab, etc) is significant. Their AI strategy is nonexistent (which is fine by me, but it was cited as one of the reasons the last CEO failed).
The only difference is they replaced a transparent CEO with one who doesn't like giving details. The honest CEO resulted in a loss in stock price. The current CEO, who is merely continuing the prior CEO's plan, doesn't reveal anything of value, and the stock skyrockets.
I think $40-60 is an appropriate price for Intel. $60 if it is doing well (which so far it's not). Going to $80 aftermarket should require them to compete and be expected to beat AMD on HW.
Examples: Boeing during "covid". Tesla pretty much anytime. Intel....
Yes, it's true that some(specifically 18A) of the successes Intel have had since the CEO switch were essentially part of the plan under Gelsinger. But to say that nothing has changed seems simply uninformed, and that's me being charitable.
LBT has done lots of things, including securing significant investment, cutting costs, made some good deals in the DC segment, and most importantly, started making real progress(still early days though) in finding actual foundry customers willing to commit to 14A. Intel under Gelsinger was approaching its foundry business in a "build it and they will come" sort of way, hemhorrhaging huge piles of cash and merely crossing their fingers that customers would show up at this point. One of the first things LBT did as CEO was make future development of 14A contingent on finding customers for it, which is precisely ehat he's been trying to do.
This quarterly report was the first during his tenure that showed some real financial progress: the quarter was profitable when analysts expected breakeven, sequential foundry revenue grew, 18A yields are up, guidance looked good. This, to you, is practically nothing? It seems to me that going from bleeding cash at an accelerating rate, to turning a profit, is about very much something.
And again, I agree that hype is a bit overzealous right now, but arguably the fact that there's market optimism about INTC again is a huge victory on LBT's part. Because how exactly is IFS supposed to attract customers willing to make multiyear commitments to their services if the company is universally seen as a sinking ship? To state the obvious, market sentiment can make or break a public company, no matter how disconnected that sentiment is from the fundamentals.
And to say Intel has no AI strategy seems disingenuous. LBT has addressed AI strategy quite explicitly in public, and you can look it up if you want.
I'm cautiously bullish on INTC in the long term. I do expect a correction at some point, just like I would for any stock that goes up more than 20% in one day, but to me that's just market swings. The daily machinations of the stock market are like a tale told by an idiot, full of sound and fury, signifying nothing.
