TSM - Intel's Ambitious Plans Create More Problems Than Benefits

2024-06-20 09:44:21 ET

Summary

• Intel has been undergoing a massive transformation since 2021 with IDM 2.0, but so far, it has created more problems than benefits.
• The deprioritized core business has been losing its competitive strength and experiencing macroeconomic weakness.
• In addition, foundry projects seem to be far in the future, and as porojects get delayed, earnings from them become less relevant for today's valuation.
• The stock appears cheap at first glance, but there is no short-term catalyst for upside, leading to my "Hold" rating.

Investment Thesis

Intel ( INTC ) has been undergoing a massive transformation since 2021 when the company announced IDM [Integrated Device Manufacturing] 2.0. Although these plans were impressive, so far, it has caused more problems than benefits for the company.

With a shifted focus and macroeconomic pressures, the core business has started to struggle. In addition, new projects have taken more time and cost significantly more money than anticipated. The promised earnings from these new ventures are still further in the future....

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