Intel: Pre-Pandemic Margins Are History – Sluggish Prospects

Summary:

  • Intel may not achieve its pre-pandemic gross margins of over ~50% anymore, as highlighted by the CFO, David Zinsner, in the recent earnings call.
  • With impacted ASPs, bloated inventory, and underloading, it is unsurprising that we are increasingly bearish on the stock, worsened by its ongoing price war with AMD.
  • On the other hand, INTC seems to have well managed the elevated interest rate environment while remaining highly liquid through the market correction.
  • However, the recent rally has propelled its valuations to 29.95x, nearer to its semiconductor chip peers, such as AMD at 35.06x and NVDA at 49.35x.
  • Either market analysts expect this elevated valuation to be a new normal for INTC, thanks to its foundry ambitions, or the company is expected to eventually grow into this pulled-forward recovery. Only time will tell.

Snail, Isolated on White

aristotoo/iStock via Getty Images

The INTC Investment Thesis Is Overly Optimistic Here

We previously covered Intel (NASDAQ:INTC) in June 2023, discussing its mixed prospects despite the generative AI boom. With its competitors rapidly gaining share, we were not certain if


Analyst’s Disclosure: I/we have a beneficial long position in the shares of INTC, AMD, NVDA, GOOG, AMZN, MSFT, TSLA, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


Leave a Reply

Your email address will not be published. Required fields are marked *