Intel (INTC)

Has been missing on financial objectives for a long time. Market growing tired of poor performance. Would not recommend investing at this time. Better options for investors out there. 

Some feel that Intel will bounce back huge, catching up in data centres, and sell more chips. Dream on. Look at their balance sheet. Last year, they cut their dividend.

Doesn't love the valuation (forward PE of 52.42x, significantly higher than industry average) relative to earnings. Sees ongoing financial challenges in returning to profitability. Lots of competition. Doesn't see a quick turnaround.

It's been badly pounded recently, down 20% in a single day. It has a lot of cash, but the company is in terminal decline. If you own it, buy it on a dip, then trade, or sell covered calls. At best, this is a trade, not an own.

They have no credibility. Their balance sheet is terrible. It could bounce tomorrow. Sell half then sell more on a bounce.

Leader today in CPUs, an area that's growing, but losing market share to AMD. NVDA is the leader in the AI accelerator market, with 10x the sales of the next closest competitor AVGO. They're not competitive in the infrastructure arena either.

Given the large single-day decline, we do not think so. INTC has been slow to adapt in the race to produce AI chips. While the decline is aggressive and it is also displaying general weakness in the market today, INTC did record a double miss on EPS and revenue, with the EPS miss being very significant (2c vs 10c expected). Both revenue and EPS declined year-over-year as well. The company is implementing a $10B cost-cutting plan which should help in the future but at 28.5x forward earnings, we are not as interested. There is turnaround potential eventually, but we are not sure that will happen in the near term. 
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Shares are plummeting 25% today after reporting. The CEO made the wrong choice in building a foundry. Why? If you're building while still designing chips, you are competing with your customers. If you're a customer going in for foundry work, how do you know Intel won't prioritize their chips over yours, or steal intellectual property. But the CEO had few options.

He sold it a few years ago, so he could get out of a capital-intensive business. He invests in capital-lite semis companies with high margins and stable profits. But a company investing a lot in capex within a cyclical industry is definitely exposed.

In a tough spot. Very expensive to build large, advanced fabs. We're talking $5-10B a pop. Falling behind and attempting to leapfrog over the #1 competitor TSM. Not constructive on it. TSM's lead very hard to catch. Would be left surviving on government handouts.

Playing the nationalism card, but TSM is now building fabs in Arizona.

Great opportunity to pick up 4 pillars. MU on the manufacturing, TSM for the foundry, LRCX or KLAC or ASML as the equipment suppliers, NVDA is a gift down here as a designer. And (he can't believe he's going to say this) even INTC; come 2025, it will be competitive with NVDA.

He's recommended it a handful of times, and it's always blown up in his face. He owns it in a few separately managed accounts, and a couple of his analysts want him to put it in the fund. The chip coming out is going to be pretty competitive, even on price, with NVDA's.

You'll probably have to wait for Q4 of this year or Q1 of 2025, but it's a pretty good bet down here around $32. 12-month price target of $41, sweet. If everything can only come together on their new offering.

It's one of those stocks that, when you look at it on paper, it's a no-brainer. However, it all comes down to execution. Small position only.

They keep missing their goals and timing as competitors surpass them. Naybe they can get their act together, but that isn't investing. Look elsewhere.

Bought it though it's unloved. Shares plunged late April on earnings and lowered guidance, but the selling is done. So the bar is set low for their next report which should be positive. Intel is starting to see analyst upgrades. The government is supporting this with its chips act.