Key takeaways
View moreIntel appears moderately undervalued based on its significantly lower EV/EBITDA and EV/Sales multiples compared to industry averages, combined with its strategic transformation initiatives and CHIPS Act funding benefits. While negative free cash flow and competitive pressures present significant risks, these appear to be more than priced into the current valuation, with the stock trading near book value despite maintaining above-industry operating margins and showing early signs of successful transformation.
- Intel's revenue declined by 11.17% from Q4 2024 to Q1 2025, signaling potential market demand and competitive pressures.
- The company's net income is negative, with -$821 million in Q1 2025, primarily due to high costs and unusual expenses.
- Intel's current and quick ratios are below industry averages, indicating a weaker ability to meet short-term obligations.
- Free cash flow to equity was -$4.370 billion for the quarter ending 2025-03-31, indicating that the company is not generating enough cash to cover its equity obligations.
- Intel's 3-year return was -38.03%, significantly underperforming benchmarks and peers, although recent performance shows some improvement.
- The company is focusing on expanding its foundry services and launching new products to drive future revenue growth, with Intel Foundry becoming an independent subsidiary.
- Intel was awarded up to $3 billion in direct funding under the CHIPS Act, supporting its manufacturing capabilities and security.
- Management guidance for Q2 revenue is $11.2 to $12.4 billion, with a gross margin of approximately 36.5% and breakeven EPS.
- Intel faces intense competition, geopolitical risks, and ongoing litigation, posing significant threats to its operations and financial performance.
- The enterprise value to EBITDA and sales ratios suggest potential undervaluation, but this is balanced against the company's financial challenges and risks.
Evaluation summary
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Company Overview:
- Intel Corp. (INTC) is a global designer and manufacturer of semiconductor products and technologies, delivering computer, networking, data storage, and communications platforms. Its operations are divided into segments including Client Computing Group (CCG), Data Center and AI (DCAI), Network and Edge (NEX), Mobileye, Accelerated Computing Systems and Graphics (AXG), and Intel Foundry Services (IFS).
- The company's key products and services include platforms for notebooks, desktops, data center solutions, and foundry services. These products are marketed and sold through OEMs, ODMs, cloud service providers, and other manufacturers. While specific revenue contributions for each segment are not detailed in the provided data, the company's SEC filings indicate that Intel Products and Intel Foundry are the primary revenue drivers.
- The benchmarks used for comparative analysis include the Technology Select Sector SPDR Fund (XLK), and the industry peers used for comparison are NVIDIA Corp. (NVDA) and Taiwan Semiconductor Manufacturing Co., Ltd. (TSM).
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Financial Performance:
- Intel's financial performance has been volatile. The most recent quarterly revenue (2025-03-31) was $12.667 billion, compared to $14.260 billion in the previous quarter (2024-12-31), representing an 11.17% decrease.
- The company's net income has been negative in recent quarters. For the quarter ending 2025-03-31, the net income was -$821 million, compared to -$126 million for the quarter ending 2024-12-31. This decline is primarily due to high cost of goods sold and selling, general, and administrative expenses.
- Gross profit margin for the quarter ending 2025-03-31 was 36.88%, compared to 39.16% in the previous quarter. EBITDA margin was 19.97% for the quarter ending 2025-03-31, compared to 21.85% in the previous quarter. These margins are above the industry average, which are -40.07% and -1950.36% respectively, indicating a better ability to manage production costs and generate earnings compared to the industry.
- Return on Assets (ROA) for the period is -9.97%, Return on Equity (ROE) is -18.66%, and Return on Invested Capital (ROIC) is -12.86%. These figures are below the industry averages of -12.76%, -39.71%, and -23.26% respectively, indicating that Intel is not generating as much profit from its assets and equity as its industry peers.
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Operational Efficiency:
- Intel's total current assets decreased from $50.829 billion in 2024-06-30 to $42.134 billion in 2025-03-31. Total current liabilities increased from $32.027 billion to $32.174 billion over the same period.
- Working capital decreased from $18.802 billion in 2024-06-30 to $9.960 billion in 2025-03-31, indicating a decline in short-term financial health.
- Net operating cash flow was $813 million for the quarter ending 2025-03-31, a significant decrease from $2.292 billion in 2024-06-30. Net investing cash flow was $81 million for the quarter ending 2025-03-31, compared to -$9.165 billion in 2024-06-30. Net financing cash flow was -$196 million for the quarter ending 2025-03-31, compared to $11.237 billion in 2024-06-30.
- Free cash flow to equity was -$4.370 billion for the quarter ending 2025-03-31, indicating that the company is not generating enough cash to cover its equity obligations.
- Total capital expenditure was $5.183 billion for the quarter ending 2025-03-31. Depreciation, depletion, and amortization were $2.674 billion for the same period.
- The company did not pay cash dividends during the quarter ending 2025-03-31.
- The current ratio was 1.31 for the quarter ending 2025-03-31, below the industry average of 4.36, indicating a weaker ability to meet short-term obligations. The quick ratio was 0.93 for the same period, also below the industry average of 3.57.
- The debt-to-equity ratio was 50.27% for the quarter ending 2025-03-31, below the industry average of 64.11%, indicating a less leveraged capital structure.
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Growth Opportunities:
- Intel is focusing on expanding its foundry services and launching new products to drive future revenue growth. The company plans to establish Intel Foundry as an independent subsidiary to provide clearer separation for external foundry customers and suppliers.
- The company is investing in R&D to develop new semiconductor products and manufacturing process technologies. R&D and MG&A expenses represented 41.5% of revenue in 2024, according to SEC filings.
- Intel anticipates PC TAM growth driven by the end of Windows 10 support and the adoption of AIPCs, and expects double-digit CPU core growth in the traditional server market.
- The company is refining its AI strategy to develop full-stack AI solutions for enterprise customers, focusing on reasoning models, AgentIC AI, and physical AI.
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Recent Developments and Market Sentiment:
- Intel was awarded up to $3 billion in direct funding under the CHIPS Act for its Secure Enclave program, according to SEC filings. This funding will support the company's efforts to enhance its manufacturing capabilities and security.
- Intel launched new product families, including the Intel Core Ultra 200V series processors and the Intel Xeon 6 processor with Efficient-cores and Performance-cores, as noted in SEC filings. These new products are expected to drive revenue growth in the client and server segments.
- Intel announced a series of cost-reduction initiatives, including significant headcount reductions, as part of its 2024 Restructuring Plan, according to SEC filings. These initiatives are aimed at improving profitability and operational efficiency.
- The recent earnings call highlighted the need for cultural and operational transformation, with a focus on AI strategy refinement and balancing foundry and internal needs. Management is targeting OpEx reductions and deleveraging the balance sheet.
- Market sentiment appears mixed, with analysts focusing on gross margin outlook, foundry customer acquisition, and product execution assessment. The company's ability to execute its turnaround strategy and achieve its financial targets will be critical in shaping market sentiment.
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Risks and Threats:
- Intel faces intense competition and rapid technological change in the semiconductor industry, as highlighted in SEC filings. Competitors include AMD, Qualcomm, and NVIDIA.
- Geopolitical tensions, trade policy changes, and regulatory risks could disrupt the company's supply chain and access to markets, as noted in SEC filings.
- The company is involved in ongoing litigation with VLSI Technology LLC over patent infringement claims, with Intel accruing a $1 billion charge related to this matter, according to SEC filings.
- Increasing cybersecurity threats and privacy risks pose a significant threat to the company's operations and reputation, as highlighted in SEC filings.
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Valuation Analysis:
- The enterprise value to EBITDA ratio is 18.23 for the quarter ending 2025-03-31, compared to an industry average of 232.96, suggesting potential undervaluation. The enterprise value to sales ratio is 2.53 for the same period, compared to an industry average of 12.19, also suggesting potential undervaluation.
- Potential catalysts include successful execution of the company's turnaround strategy, expansion of foundry services, and launch of new products. Headwinds include intense competition, geopolitical risks, and ongoing litigation.
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Price Performance:
- Intel's stock price has fluctuated in recent months. The price ranged from $19.55 on 2025-05-30 to $22.56 on 2025-05-13.
- Intel has underperformed benchmarks and peers over the long term. The company's 3-year return was -38.03%, compared to the Technology Select Sector SPDR Fund (XLK)'s 91.1%, NVIDIA's 778.02%, and Taiwan Semiconductor Manufacturing Co., Ltd. (TSM)'s 167.0%. However, in shorter time frames such as Year-To-Date (YTD) and 1 Week, INTC has outperformed both NVDA and TSM, indicating a recent positive trend. For example, YTD, INTC returned 11.52% compared to NVDA's 6.95% and TSM's 9.82%.
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Future Outlook:
- Management guidance for Q2 revenue is $11.2 to $12.4 billion, with a gross margin of approximately 36.5% and breakeven EPS, as noted in the earnings call summary.
- The company expects DCAI to decline at a faster rate than CCG, and Intel Foundry revenue is expected to decline due to pull-ins to Q1 and capacity constraints in Intel 7, according to the earnings call summary.
- Recent news and developments, such as the CHIPS Act funding and new product launches, are expected to positively influence the company's future performance. However, economic uncertainty and geopolitical risks could pose challenges.
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Summary:
- Intel faces significant challenges, including declining revenue, negative net income, and operational inefficiencies. However, the company is undertaking strategic initiatives to improve its financial performance and competitive position.
- SWOT Analysis:
- Strengths: Strong brand recognition, leading-edge technology, and significant R&D investments.
- Weaknesses: Declining revenue, negative net income, operational inefficiencies, and high debt levels.
- Opportunities: Expansion of foundry services, launch of new products, and growth in AI and data center markets.
- Threats: Intense competition, geopolitical risks, regulatory challenges, and cybersecurity threats.
- Overall, Intel's financial health is weak, with negative net income and declining cash flow. However, the company has a strong balance sheet and is taking steps to improve its financial performance.
- Critical factors for future performance include successful execution of the company's turnaround strategy, expansion of foundry services, and launch of new products.
- Areas requiring further monitoring include revenue growth, cost management, cash flow generation, and competitive landscape.
- Intel presents a high-risk, high-reward investment profile. The company faces significant challenges but has the potential to improve its financial performance and competitive position through strategic initiatives and investments. However, investors should be aware of the risks and closely monitor the company's progress.
Price history
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Fundamentals
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Insights
- Intel's revenue growth is a key area of concern, requiring strategic initiatives to improve market position and capitalize on opportunities in the AI era.
- The company's liquidity position is weaker than industry peers, necessitating improved working capital management and cash flow generation.
- Non-recurring items significantly impact net income, making it difficult to assess sustainable earnings, and management should focus on reducing these expenses.
- Intel's strategic investments in manufacturing facilities and technology advancements are crucial for maintaining a competitive edge in the semiconductor industry.
- Successful execution of Intel's strategy to establish Intel Foundry as an independent subsidiary, along with its cost-reduction initiatives, will be critical to improving its financial performance and profitability going forward.
Analysis
- Revenue
- Sales have shown a slight decrease, indicating potential challenges in market demand or competitive pressures.
- The company's revenue is significantly greater than the industry average, but the enterprise value to sales is lower, suggesting potential undervaluation.
- Management is focused on strategic initiatives to drive future revenue growth, such as expanding foundry services and launching new products.
- Profitability
- The company is currently experiencing negative net income, driven by significant unusual expenses and restructuring charges.
- Gross profit margin and EBITDA margin are above the industry average, indicating a better ability to manage production costs and generate earnings.
- Management is focused on cost reduction and operational efficiency to improve profitability.
- Liquidity
- The current ratio and quick ratio are below the industry average, indicating a weaker ability to meet short-term obligations.
- The company's liquidity position needs to be improved to ensure financial stability.
- Monitoring working capital management will be crucial for enhancing liquidity.
- Solvency
- The debt-to-equity ratio is below the industry average, indicating a less leveraged capital structure.
- The company's solvency position is relatively stable, but needs to be monitored closely.
- Debt management strategies will impact the company's financial flexibility and solvency.
- Operational Efficiency
- Increasing inventories and fluctuating receivables suggest potential inefficiencies in asset utilization.
- The company needs to improve its asset utilization to enhance operational efficiency.
- Management is focused on organizational transformation and streamlining operations to improve efficiency.
- Cash Flow Analysis - The company's cash flow from operations is volatile, impacted by negative net income and fluctuating working capital. - Free cash flow is negative, indicating a need for external financing or asset sales. - Improving net income and managing working capital effectively are crucial for generating positive cash flow.
- Risk Factors
- Intense competition and rapid technological change in the semiconductor industry pose significant risks.
- Geopolitical tensions, trade policy changes, and regulatory risks could disrupt the company's supply chain and access to markets.
- The company's financial performance has been significantly impacted by non-cash impairments, restructuring charges, and a valuation allowance against its US deferred tax assets.
- Future Outlook
- The company's future performance will depend on improving revenue growth, managing costs effectively, and generating positive cash flow.
- Strategic initiatives, such as expanding foundry services and launching new products, are expected to drive future growth.
- Monitoring key metrics, such as gross margin, operating margin, and free cash flow, will be crucial for assessing financial health.
- Profitability
Financial statements
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Public filings
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- Intel faces intense competition and rapid technological change in the semiconductor industry, requiring significant long-term investments in R&D and manufacturing that may not realize favorable returns.
- Geopolitical tensions, trade policy changes, and regulatory risks, particularly between the US and China, present major uncertainties that could disrupt Intel's supply chain, operations, and access to markets.
- Intel's financial performance in 2024 was significantly impacted by non-cash impairments, restructuring charges, and a valuation allowance against its US deferred tax assets, highlighting the volatility and risks in its business.
- Despite these challenges, Intel maintains a strong liquidity position and continues to invest in advancing its process technology, product roadmaps, and foundry capabilities to position itself for long-term competitiveness.
- Successful execution of Intel's strategy to establish Intel Foundry as an independent subsidiary, along with its cost-reduction initiatives, will be critical to improving its financial performance and profitability going forward.
Core Business and Operations:
- Intel is a global designer and manufacturer of semiconductor products, including CPUs and other solutions, primarily marketed and sold through its Intel Products business and manufactured via its Intel Foundry operations and other suppliers
- Intel's customers primarily include OEMs, ODMs, cloud service providers, and other manufacturers and service providers who buy Intel's products through distributor, reseller, retail, and OEM channels
- Intel's key products and solutions span client computing, data center and AI, network and edge computing, and foundry services
- Intel's main competitors include AMD, Qualcomm, NVIDIA, and other semiconductor companies offering competing CPU, GPU, and accelerator products
Industry and Market Trends:
- The semiconductor industry is highly competitive and subject to rapid technological, geopolitical, and market changes, with increasing demand for AI-related products and services
- Geopolitical tensions, trade policies, and regulatory changes, particularly between the US and China, present significant risks and uncertainties that could impact Intel's supply chain, operations, and access to markets
- The capital intensity of leading-edge semiconductor manufacturing continues to increase, requiring significant ongoing investments that may not realize a favorable return
Recent Events:
- Intel announced plans to establish Intel Foundry as an independent subsidiary to provide clearer separation for external foundry customers and suppliers
- Intel was awarded up to $3 billion in direct funding under the CHIPS Act for its Secure Enclave program
- Intel launched new product families, including the Intel Core Ultra 200V series processors and the Intel Xeon 6 processor with Efficient-cores and Performance-cores
- Intel announced a series of cost-reduction initiatives, including significant headcount reductions, as part of its 2024 Restructuring Plan
Risk Factors:
- Intense competition and rapid technological change in the semiconductor industry
- Significant long-term and inherently risky investments in R&D and manufacturing facilities
- Complexities and uncertainties in developing and implementing new semiconductor products and manufacturing process technologies
- Reliance on a complex global supply chain subject to disruptions, delays, and shortages
- Product defects, security vulnerabilities, and other product issues
- Increasing cybersecurity threats and privacy risks
- Intellectual property risks, including related litigation
- Ability to attract, retain, and motivate key talent
- Macroeconomic conditions and geopolitical tensions, including trade policy changes
- Debt obligations and reduced return of capital to stockholders
Legal Matters:
- Ongoing litigation with VLSI Technology LLC over patent infringement claims, with Intel accruing a $1 billion charge related to this matter
- Ongoing litigation and regulatory proceedings related to the European Commission's 2009 competition decision, with Intel accruing a $401 million charge for a related fine
- Consumer class action lawsuits related to security vulnerabilities in Intel's products, with Intel unable to estimate potential losses
Management's Discussion and Analysis:
- Intel's revenue declined 2% in 2024 due to lower all other revenue and lower Intel Foundry revenue, partially offset by higher Intel Products revenue
- Intel's consolidated gross margin decreased 20% in 2024 due to higher impairment charges, accelerated depreciation, and other cost factors
- Intel's operating expenses increased 2% in 2024, with R&D and MG&A expenses representing 41.5% of revenue
- Intel recognized significant restructuring, impairment, and valuation allowance charges in 2024 totaling over $15 billion
- Intel's liquidity and capital resources remain strong, with $25.6 billion in total cash and short-term investments as of December 2024
Earnings calls
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Earnings Report 2025Q1 (2025-04-24)
Key takeaways
- Cultural and Operational Transformation is Key: The success of Intel's turnaround hinges on its ability to fundamentally transform its culture and streamline its operations, as emphasized by the new CEO.
- AI Strategy is Critical but Evolving: Intel is actively refining its AI strategy, but the specific roadmap and competitive positioning remain uncertain, requiring close monitoring.
- Balancing Foundry and Internal Needs is a Challenge: Balancing the needs of the foundry business with internal product demands and capital allocation presents a complex challenge for Intel.
- Macroeconomic Uncertainty Adds Risk: Shifting trade policies, inflation, and regulatory risks create significant uncertainty for Intel's financial performance and outlook.
- Gross Margin Improvement is a Long-Term Goal: While Q1 gross margins exceeded expectations, sustained improvement will depend on product mix, cost management, and the successful ramp-up of new technologies like 18A.
Focus of management’s prepared remarks
- Organizational Transformation: Flattening the leadership structure by having critical product, manufacturing, and GNA functions report directly to the CEO to improve decision-making speed and agility.
- Cost Reduction: Lowering the calendar 2025 OpEx target to $17 billion and the calendar 2026 target to $16 billion. Reducing gross CapEx target for 2025 to $18 billion.
- Engineering Talent Revitalization: Rebuilding the engineering talent pool by promoting internal leaders, bringing back lost talent, and recruiting new people.
- Return to Office Mandate: Implementing a four-day-per-week return to office policy effective Q3 2025 to foster collaboration and innovation.
- Product Focus: Refocusing on building best-in-class products, particularly in the client and server businesses, to meet the needs of customers in the AI era.
- AI Strategy Refinement: Refining the AI strategy to develop full-stack AI solutions for enterprise customers, focusing on reasoning models, AgentIC AI, and physical AI.
- Foundry Customer Trust: Instilling a customer service mindset across the foundry business and embracing industry-standard EDA tools and best design practices.
- Balance Sheet Strengthening: Monetizing non-core assets, including a stake in Altera, and not spinning off Intel Capital but selectively investing to support the company's strategy.
- Market Growth Drivers: Anticipating PC TAM growth driven by the end of Windows 10 support and the adoption of AIPCs, and expecting double-digit CPU core growth in the traditional server market.
- Economic Uncertainty: Acknowledging increasing economic uncertainty due to shifting trade policies, persistent inflation, and increased regulatory risk, leading to a conservative approach in managing the business.
Focus of the analyst Q&A
- Balancing Internal Product Roadmap vs. Foundry:
- How to balance fixing the internal product roadmap with filling the foundry and ensuring sufficient unit volumes.
- How the flexibility and speed goals would be adopted and capitalized by going to foundry.
- Gross Margin Outlook:
- Puts and takes on gross margin for 2025 and 2026, considering strategic changes, cost-cutting, and lower CapEx.
- Impact of Lunar Lake margins, 18A ramp-up costs, and potential tariff implications on gross margins.
- Gross Margin Clean Number:
- What a clean gross margin number is for March, adjusting for COGS headwinds and grant accounting.
- Whether Q2 gross margin could be lower than the guided 36.5%.
- Foundry Customer Acquisition:
- How the company thinks about announcing new third-party foundry customers.
- Whether there is potential to add a tier-one customer this year.
- Product Execution Assessment:
- Assessment of Panther Lake and Clearwater Forest in the 18A portfolio.
- Whether these are leadership products and if further work is needed to achieve a leadership position.
- Seven Nanometer Capacity Constraints:
- Reasons for the seven-nanometer capacity constraints and their potential impact.
- Implications of stronger demand for older generation parts like Raptor Lake versus newer ones.
- AI Strategy and x86 Reinvention:
- Whether the AI strategy involves reinventing x86 or a broader portfolio including ARM.
- Whether the focus is more on edge AI.
- OpEx Guidance and Headcount Reductions:
- Whether the OpEx guide for 2025 and 2026 fully contemplates planned headcount reductions.
- Potential for additional savings over time.
- Data Center Performance:
- How the data center side is expected to perform through the year, especially in the second half.
- Impact of Granite Rapids and Xeon six, as well as competition from ARM.
- CapEx Rationalization:
- How CapEx will be managed through 2025-2026, considering the existing fab footprint.
- Potential for rationalizing CapEx given the current fab footprint.
- Panther Lake Launch Strategy:
- Implications of the macro environment and tariffs on the Panther Lake launch.
- How to think about the launch of new products given the demand pivot back to older products.
- Data Center AI Strategy:
- Strategy for products like Gowdy and Falcon Shores inside the data center.
- Updates on the strategy, particularly inside the data center.
- Turnaround Timeline and Metrics:
- Realistic timeline for Intel's turnaround.
- Key metrics to measure progress, such as share gains, gross margins, or free cash flow.
- IDM Structure Viability:
- Whether AT and A progress and low single-digit top-line growth are sufficient to make the manufacturing business viable.
- At what point the IDM structure needs to be rethought.
- RackScale Networking and AI Build-Out:
- How the company thinks about RackScale networking and the pieces Intel has internally to compete in the cloud infrastructure AI build-out.
- Whether UCIE or other building blocks are strategically needed to drive the networking scale upside.
- Altera Divestiture Impact on OpEx:
- Clarification on whether the OpEx structure for 2025-2026 is exclusive of the pending divestiture of a 51% stake in Altera.
Summary
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Financial Performance
Intel reported Q1 2025 revenue of $12.7 billion, exceeding guidance. Non-GAAP gross margin was 39.2%, also above guidance. EPS was 13¢, surpassing the breakeven guidance. Q1 operating cash flow was $800 million, with adjusted free cash flow at negative $3.7 billion due to growth CapEx of $6.2 billion. The company ended the quarter with a cash balance of $21 billion. Q2 revenue is guided to $11.2 to $12.4 billion with a gross margin of approximately 36.5% and breakeven EPS.
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Revenue Drivers
Better-than-expected Xeon sales drove Q1 revenue. The client side benefited from the end of service for Windows 10 and anticipation of AIPCs. DCAI revenue was driven by hyperscaler demand for host CPUs for AI servers and storage compute. Intel Foundry revenue increased due to pull-ins of Intel 7 wafers and increased advanced packaging services. The company anticipates a potential TAM contraction due to shifting trade policies and regulatory risks.
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Profit Margins and Cost Management
Non-GAAP gross margin for Q1 was 39.2%, driven by stronger demand for Raptor Lake and improved costs for Meteor Lake. The company is targeting OpEx of $17 billion in 2025 and $16 billion in 2026. Gross CapEx target for 2025 is now $18 billion. The company aims to monetize non-core assets, including a stake in Altera, and is not spinning off Intel Capital but will monetize its existing portfolio. The company is focused on deleveraging its balance sheet.
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Guidance and Outlook
Q2 revenue is guided to $11.2 to $12.4 billion, with a gross margin of approximately 36.5% and breakeven EPS. DCAI is expected to decline at a faster rate than CCG. Intel Foundry revenue is expected to decline due to pull-ins to Q1 and capacity constraints in Intel 7. The company expects NCI to grow in fiscal year 2026 to an updated range of $1.3 to $1.5 billion on a GAAP basis. Full-year revenue seasonality is expected to follow the last ten-year average, but with significant uncertainty due to potential tariffs and tight supply on older nodes.
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Strategic Initiatives
The company is simplifying its organizational structure and reducing layers of management. A four-day-per-week return to office policy is mandated starting in Q3 2025. The company is refocusing on its core client and server business and revitalizing its engineering core. The company is refining its AI strategy with a focus on emerging areas of interest and building trust with foundry customers. The company is prioritizing the ramp of Intel 18A and working closely with customers to define KPIs for Intel 14A.
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Management Commentary
CEO Lip Bu Tan emphasized the need to transform the company's culture, simplify operations, and empower smaller teams. He highlighted the importance of building best-in-class products and refining the AI strategy. CFO David Zinsner noted the increasing economic uncertainty and the need to manage the business with conservatism. Management expressed confidence in achieving OpEx and CapEx reduction targets and deleveraging the balance sheet. Lip Bu stated, "Organizational complexity and bureaucracies have been suffocating the innovation and agility we need to win."
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Industry and Market Conditions
The company sees growth in the PC TAM due to the end of service for Windows 10 and the adoption of AIPCs. The traditional server side is expected to see double-digit CPU core growth. However, the economic landscape is increasingly uncertain due to shifting trade policies, persistent inflation, and increased regulatory risk. The company is managing the business with conservatism due to the potential for an economic slowdown and the impact of tariffs.
Comparative analysis
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Benchmarks (as of 2025-06-24)
Technology Select Sector SPDR Fund (XLK)
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Performance Comparison:
- Intel Corp. (INTC) has shown mixed performance compared to Technology Select Sector SPDR Fund (XLK). While INTC outperformed XLK in the short term (Year-to-Date, 1 Week, 1 Month, and 6 Months), it significantly underperformed over longer periods (1 Year, 2 Years, and 3 Years). For instance, INTC's 3-year return was -38.03%, compared to XLK's 91.1%, indicating substantial underperformance.
- The consistency of INTC's performance relative to XLK has been variable. INTC's recent outperformance in shorter time frames suggests some positive momentum, but its longer-term underperformance indicates underlying challenges.
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Risk and Return Analysis:
- The annualized returns of INTC are consistently lower than those of XLK. For example, INTC's 1-year annualized return was -25.69%, while XLK's was 10.03%. This indicates that INTC has provided lower returns compared to the broader technology sector.
- INTC's annualized volatility has generally been higher than XLK's, indicating that INTC's price movements are more pronounced. For instance, in Q4 2022, INTC's volatility ranged from 28.62% to 54.83%, while XLK's ranged from 27.14% to 43.2%.
- INTC's maximum drawdown was -65.53% on 04/08/2025, significantly larger than XLK's maximum drawdown of -33.56% on 10/12/2022. This indicates a higher risk profile for INTC, with more severe potential losses from previous peaks.
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Risk-Adjusted Performance:
- The Sharpe Ratio of INTC is generally lower than that of XLK, indicating that INTC offers a less favorable risk-adjusted return. INTC often has negative Sharpe ratios, suggesting that the risk outweighs the returns.
- INTC's beta values are generally above 1 and have shown an increasing trend, indicating that INTC is more volatile than the market and its sensitivity to market movements has increased over time. As of Q2 2025, INTC's beta remains high (1.74 to 1.76), suggesting that it continues to be more volatile than the market.
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Overall Assessment:
- INTC's performance has been inconsistent, with recent short-term outperformance overshadowed by significant longer-term underperformance compared to Technology Select Sector SPDR Fund (XLK). INTC exhibits higher volatility, larger drawdowns, and less favorable risk-adjusted returns, as indicated by its lower Sharpe Ratio and higher beta.
- The increasing beta and substantial drawdowns suggest that INTC carries a higher risk profile. While recent performance improvements are notable, the overall data indicates that INTC has faced significant challenges in delivering consistent and competitive returns relative to the broader technology sector.
Peers Price History(as of 2025-06-24)
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Performance Comparison:
- Intel Corp. (INTC) has shown mixed performance compared to NVIDIA Corp. (NVDA) and Taiwan Semiconductor Manufacturing Co., Ltd. (TSM). Over the past three years, INTC has significantly underperformed its peers, with returns of -38.03% compared to NVDA's 778.02% and TSM's 167.0%. However, in shorter time frames such as Year-To-Date (YTD) and 1 Week, INTC has outperformed both NVDA and TSM, indicating a recent positive trend. For example, YTD, INTC returned 11.52% compared to NVDA's 6.95% and TSM's 9.82%.
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Risk and Return Analysis:
- Intel's annualized returns are consistently lower than its peers. Over the past three years, INTC's annualized return was -14.74%, significantly lower than NVDA's 106.3% and TSM's 38.73%. This indicates that INTC has not provided competitive returns compared to its peers over this period.
- Intel's annualized volatility, while generally lower than NVIDIA's, is still substantial. Throughout the period from Q2 2022 to Q2 2025, INTC's volatility fluctuated, with a recent range of 33.51% to 47.65% in Q2 2025. This suggests that INTC's stock price experiences significant swings, though less extreme than NVDA.
- Intel experienced a maximum drawdown of -65.53% on 2025-04-08, which is a substantial decline from its previous peak. This drawdown is larger than TSM's maximum drawdown of -56.62% but comparable to NVDA's -66.34%. This indicates a high level of risk for INTC investors.
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Risk-Adjusted Performance:
- Intel's Sharpe Ratio is generally lower than its peers, often negative, indicating poor risk-adjusted returns. In Q2 2025, INTC's Sharpe Ratio ranged from -0.36 to -0.14, while NVDA's ranged from 0.41 to 0.96 and TSM's ranged from 0.63 to 0.87. This suggests that INTC is not providing adequate returns for the level of risk taken.
- Intel's Beta is consistently above 1, indicating that it is more volatile than the market. In Q2 2025, INTC's Beta ranged from 1.74 to 1.76, suggesting that INTC's price movements are more pronounced than the overall market.
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Overall Assessment:
- Intel Corp. (INTC) has underperformed NVIDIA Corp. (NVDA) and Taiwan Semiconductor Manufacturing Co., Ltd. (TSM) over the past few years, with lower annualized returns, higher drawdowns, and poorer risk-adjusted performance. While recent performance (YTD and 1 Week) shows some outperformance, the longer-term trends indicate significant challenges. INTC's higher beta and negative Sharpe Ratio suggest that it is a riskier investment compared to its peers. Investors should be cautious and consider the company's turnaround strategies and future growth prospects before making investment decisions.
Peers Fundamentals(as of 2025-03-31)
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Market Position and Size:
- Intel Corp. (INTC) has a significantly smaller market capitalization (98363.1) compared to NVIDIA Corp. (NVDA) (3608760.0) and Taiwan Semiconductor Manufacturing Co., Ltd. (TSM) (1141358.17).
- INTC's revenue (53044) is also lower than NVDA (148515) and TSM (96696.19). Its EBITDA (7370) is substantially lower than NVDA (88248) and TSM (66532.71).
- INTC's net income is negative (-19196), while NVDA (76774) and TSM (40303.87) have positive net incomes.
- This indicates that INTC holds a smaller market position compared to its peers, with lower revenue, profitability, and overall market valuation.
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Profitability and Efficiency:
- INTC's Gross Profit Margin (31.67) is lower than NVDA (70.11) and TSM (56.02).
- Its EBITDA Margin (13.89) is significantly lower than NVDA (59.42) and TSM (68.81).
- INTC's Net Profit Margin (-36.19) is substantially lower than NVDA (51.69) and TSM (41.68).
- INTC's Return on Average Assets (-9.97), Return on Average Total Equity (-18.66), and Return on Average Total Capital (-2.58) are all negative, while its peers have positive returns.
- These figures suggest that INTC is less profitable and efficient in generating returns compared to its peers.
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Financial Health and Stability:
- INTC's Current Ratio (1.31) and Quick Ratio (0.93) are lower than NVDA (3.39 and 2.96, respectively) and TSM (2.39 and 2.18, respectively), indicating weaker liquidity.
- INTC's Total Debt to Total Equity Ratio (50.27) is higher than NVDA (12.27) and TSM (23.69), suggesting a more leveraged balance sheet.
- INTC's Debt / EBITDA (6.8) is higher than NVDA (0.1) and TSM (0.49), indicating a greater debt burden relative to earnings.
- These metrics suggest that INTC's financial health and stability are weaker compared to its peers.
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Valuation and Market Perception:
- INTC's Enterprise Value To Sales (2.53) is lower than NVDA (18.1) and TSM (8.41).
- Its Enterprise Value To EBITDA (18.23) is lower than NVDA (30.45) but higher than TSM (12.22).
- INTC's Price to Book Ratio (0.99) and Price To Sales Ratio (1.85) are lower than NVDA (43.02 and 24.51, respectively) and TSM (8.24 and 11.8, respectively).
- INTC's Price to Free Cash Flow (-7.66) is negative, while its peers have positive values.
- These valuation metrics suggest that the market perceives INTC as less valuable compared to its peers, likely due to its lower profitability and growth prospects.
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Cash Flow and Capital Management:
- INTC's Net Operating Cash Flow (10324) is lower than NVDA (76158) and TSM (64042.22).
- INTC's Total Capital Expenditure (23157) is higher than NVDA (4094) but lower than TSM (33278.11).
- INTC's Free Cash Flow (-12833) is negative, while NVDA (72064) and TSM (30764.11) have positive free cash flow.
- This indicates that INTC is struggling to generate positive free cash flow, which could limit its ability to invest in future growth or return capital to shareholders.
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Growth and Future Prospects:
- INTC shows consistently lower growth compared to the peer group average across most metrics, including Sales/Revenue, EBITDA, Net Income, and Free Cash Flow.
- INTC's 3-year and 5-year CAGR figures for Sales/Revenue and EBITDA are significantly lower than the peer group averages, indicating a weaker long-term growth trend.
- These trends suggest that INTC's future growth prospects are less promising compared to its peers.
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Potential for Investment:
- INTC's lower valuation metrics may attract value investors, but its negative earnings, weak cash flow, and inferior growth prospects raise concerns.
- Compared to its peers, INTC appears less attractive due to its underperformance in profitability, efficiency, and growth.
- Investors may want to consider INTC if they believe the company can successfully execute its turnaround strategy and improve its financial performance.
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Key Risks and Considerations:
- INTC's ability to improve its profitability and efficiency is a key risk.
- Its high debt load and negative free cash flow could limit its financial flexibility.
- Its slower growth compared to peers could result in a further decline in market share.
- Execution risk associated with its turnaround strategy and investments in new technologies.
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Overall Assessment:
- INTC's overall financial position, performance, and outlook are weaker compared to its peer group.
- Its lower profitability, efficiency, and growth prospects, combined with its higher debt load and negative free cash flow, raise concerns about its ability to compete effectively in the long term.
- While INTC may have some potential for a turnaround, it faces significant challenges and risks.
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