TXN - Intel Q4 2023 Earnings Quick Takes: Time's Ticking

2024-01-25 18:30:43 ET

Summary

• Intel Corporation stock has lagged behind the broader semiconductor sector's rally this year, and the Q4 outperformance has offered little respite.
• The company's weak forward guidance further exacerbates the situation, suggesting a lack of Intel momentum in catching up to peers with its "AI Everywhere" mandate.
• Looking ahead, Intel will likely remain a function of broader market trends (e.g., PC recovery; auto slowdown), but struggle to carve a competitive advantage.
• This is expected to hinder prospects of an upward valuation re-rate needed to justify the costly IDM 2.0 strategy, as confidence in Intel's ability to capitalize on the emerging AI opportunity starts to dwindle.

Intel Corporation ( INTC ) stock has largely lagged behind the broader semiconductor sector's rally in recent weeks. Led by relentless optimism over at rival NVIDIA Corporation's ( NVDA ) recent product launches at CES 2024, the Philadelphia Semiconductor Index ( SOX ) has appreciated about 11% since the start of the new year. This compares to Intel's sluggish ~4% move over the same period.

In our previous coverage on Intel, we had praised the chipmaker's differentiated focus on AI opportunities in PC and other mobile applications - an area in which it dominates. Yet Nvidia's recent upgrades made to its slate of GeForce RTX GPUs curated for the AI PC era have largely overshadowed Intel's ambitions on this front....

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