2024-04-30 13:54:54 ET
Summary
- Intel reported in-line Q1 results and just below in-line guidance, with decent performance in core businesses but weakness in adjacent businesses.
- The company remains in the investment phase of its turnaround, with important successful milestones passed during the quarter. Intel is finally back (for real), which is clearly underappreciated.
- Intel's upcoming product roadmap, including Sierra Forest and Granite Rapids, shows promise and indicates the company's return to competitiveness. 18A launch in mid-2025 is ahead of expectations.
- The valuation only reflects the near-term, whereas Intel is currently like a start-up in leading-edge manufacturing. Profitability is completely subordinate to technology progress (and the financial opportunity that will open).
- A comparison to Tesla shows that Intel has a much improved say/do ratio. Some companies are just talking without executing. Intel (with Pat Gelsinger) is doing both.
Investment Thesis
Intel ( INTC ) reported in-line Q1 results and just below in-line guidance. That is, in-line compared to what Intel (for some reason clearly not analysts) had forecasted: sequential growth through the year with a more major QoQ inflection in revenue in the second half.
Looking at the results more closely, the results of the core businesses were actually very decent, with especially the PC up quite nicely, although DCAI and NEX remain near their downturn troughs (but at least didn’t sink further). The main damage was in the adjacent businesses, with Mobileye ( MBLY ) down 50% and Altera even down 60%.
While Intel by no means reported shiny results, investors should remember that the company remains firmly in the investment phase of its turnaround, with yet again several very important milestones that have been successfully passed during the quarter. The evidence that Intel has indeed rebuilt its execution machine is now overwhelmingly mounting. With Intel 3 now in HVM (high-volume manufacturing), nearly/roughly on par with others' N3, and the next node already starting HVM in just a few months from now, Intel is officially back....
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For further details see:
Intel On Sale As Turnaround Unfolds