INTC - Intel: I Think It's Time To Dump This Chip Giant (Rating Downgrade)
2024-01-31 02:01:16 ET
Summary
- Intel faces multiple headwinds in 2024, including decreased demand for x86-based chips and a softening computing landscape.
- The IFS business has the potential for long-term returns but requires significant capex to reach a competitive scale.
- Shares are trading at a 10% overvaluation given a base-case valuation model.
- Multiple competitive headwinds and overvaluation suggest little upside in shares during 2024.
- Rating downgrade to Sell.
Investment Thesis - Q4 FY23 Update
Intel is a semiconductor firm that faces multiple headwinds moving into 2024. Decreased demand for their x86-based chips has hurt Intel’s revenues and profitability significantly while a soft computing landscape has further hurt the firm's bottom- and top-line.
While their IFS business has the potential to generate massive returns for the company in the long run, the segment still requires huge amounts of capex to reach an economically competitive scale.
The solid 22% rise in valuations since I last wrote about Intel has left shares trading at around a 10% overvaluation....
Intel: I Think It's Time To Dump This Chip Giant (Rating Downgrade)