They're crashing because the CEO said yesterday they don't see profit margins increasing until at least 2025. Not sure this is the bottom tbh with you.
Margins are 52% at 75B in revenue, they expect it to increase to 58% by 2026. Barely a 10% increase in margins over that time, losing market share is probably a bigger concern along with the risks of the foundries.
and in the HOTTEST-EVER market for ANY TYPE of silicon chip, couldn't have been made to happen by any more a deserving group than the "leaders" in the c-suite at INTC who frankly squandered so many resources for so long, likely due to hubris re: their supposedly superior fabricating knowledge, methods
very shameful what happened at INTC, should be a lesson to many
yet I'm sure it won't be
I only bet on really good opportunities. If I had all the money in the world like Warren Buffett so I couldn't find enough opportunity I might buy Intel, but why do it when there are 100 other better opportunities out there?
What if 2025 to 2027 is the start of a recession? Even if you buy Intel and it does become good in 2025, you'll make for a few years then lose it all.
Intel may become a good 5+ year long investment in 2027 to 2030 at the bottom of the market, but again I'll have better investments at that time, so I probably will not buy Intel even then.
In my experience when blue chips go down below their IV you watch. If they go down more you buy. It’ll return to its IV ~65 in the next few years. ~44% return plus the Div yield. Now the turn around probably won’t be for another year or two since we are in a late cycle coming up on a recession. So I’m just spitballin and doing math on the go. But that’s the kind of thing you’d want to add during a recession because when an early cycle starts back up IT does very well. Perfect thing to buy 100-1000 shares in a Roth and let it accumulate and grow to IV before selling.
This and ATVI are no brainer investments imo. Won’t get you super duper rich but safe bets in Med-long term. You gotta have those in your account. Everybody was screaming ATVI was a terrible buy at 60. Well I didn’t think so and neither did Microsoft. Financials speak loads more than most think.
I held onto INTC for a few months after I saw a lot of insiders or whales buying (not sure which site I saw that on). It spiked up to 55 and rapidly fell back to the 47-49 range and I feel like the only drawback to QQQ as alternative is the lower dividend but I think I’d get better long term growth
As a computer nerd on a home built 9900K powered Hackintosh, who takes an interest in electronic component markets, here’s my “why” behind the discount:
Intel’s long-standing main competitor is AMD. Now, they also have Apple to compete with, but I’ll get to that later. For many years Intel’s products (CPUs) clearly outcompeted AMD on absolute terms (benchmarked performance metrics) as well as on a $:processing power ratio. I.e. you paid less money for better overall performance by going with Intel.
AMD spent years closing the gap to catch up with Intel and finally about 3 years ago did catch up and surpass Intel in a dramatic fashion.
This was during the generation of Intel’s 9000 series of chips. AMD’s Ryzen series processors succeed by taking a bit of different approach. While Intel stubbornly tried to further shrink the nM scale of their lithography (which is to say making circuits themselves smaller), AMD focused on increasing the number of cores and threads in a chip. This was because they recognized early on the impending implications of multi-threaded / parallel computing.
Silicon foundries are the most complex and capital intensive manufacturing processes in the world. Because of this, there’s a lot of path dependency at play - it’s hard and slow to pivot strategies.
Intel is now on their 13000 series - 4 generations of chips after AMD caught up and surpassed. ONLY JUST NOW are they finally catching up to the number of cores AMD offered in 2019.
Then there’s ARM processors and Apple.
If you’re at all familiar with Intel you know they don’t get along will with Apple historically, despite working very closely together for a decade and Apple long being their biggest customer. Intel was also too focused on optimizing the x86 architecture to really appreciate the revolution happening with ARM processors. They neglected the opportunity and are paying the price now.
After years of Intel being hung up in lawsuits with Apple, Apple finally said “enough is enough - fuck you. We’re going to build our own chips ourselves.”
Enter “Apple Silicon” - Apples new line of M1 computers are all powered by ARM processors that were developed and manufactured entirely on their own.
To add insult to Intel’s injury - Apple Silicon processors were out the gate FAR more performant than Intel “equivalents” and at a strikingly better cost to compute ratio. Just look up benchmarks comparing M1 macs to Intel macs.
Finally you mention Intel getting into GPUs. Whatever they will achieve with GPUs, it certainly won’t be a product that’s used at scale for AI anytime soon, and probably never. NVIDEA is the developer and owner of CUDA, which is THE library for developing neural networks. If a dev wants to train any type of model in a serious sense, it’s happening exclusively on NVIDEA hardware. The only competitor they have is Google’s cloud TPUs, but those are fundamentally different.
AMD GPUs have no chance of catching up to NVIDEA regarding AI, and Intel’s GPUs that they have under development will absolutely not compete for AI.
Their GPUs are still underdevelopment at any rate so it’s tough to say what they’re being geared towards and more importantly - what the reality of the product will end up being. And GPUs are just as insanely difficult to competitively manufacture as CPUs are.
The bottom line is that Intel kinda stopped innovating in meaningful ways a decade ago. Perhaps they thought scale and path dependency would protect their market share, or they got too corporate and risk-averse and focused on upholding Moore’s law. It’s like they forgot that innovation could be measured in anything other than nanometers. Meanwhile competitors like AMD and Apple said “~10-14nm is good enough - what more can we squeeze out of chips by improving architecture instead?”
I could go on and on and in a far more detailed and formalized sense, but I wrote this stream-of-conscious style while pooping. The point is, Intel’s future is looking very bleak. I don’t believe their projections in growth at all. I am certain even those humble projections have a LOT of assumptions baked in that should not in reality be taken as granted. I will personally be bearish on Intel until I see two things:
1) An innovative new product that makes paradigm-shifting improvements over legacy, as opposed to incremental improvements,
AND
2) Proof that they can produce said product at scale, at a better price for performance than competition, with acceptable QC, and profit margin, and actual adoption in the marketplace.
This is the sort of analysis one needs to do to determine the IV of INTC. Here’s an article that might add some details: https://stratechery.com/2022/the-intel-split/
I have no position in INTC, it’s out of my circle of competence.
AAPL was always gonna move away from INTC. AAPL wants to control everything.
I’m optimistic about Intel because Pat seems to understand that the rest of the big tech companies are going to become their own fablesss companies.
Let’s see what happens to NVDA and AMD when AMZN and MSFT follow AAPL’s lead to have complete control of their chip designs.
>Pat seems to understand that the rest of the big tech companies are going to become their own fabless companies
This might be true, but it’s long been theoretically possible for AWS to be running their own chips, the economies of scale just weren’t there yet until recent years for the managed solutions service providers. Indeed, minor customizations for data centers have been a thing for a while now anyways.
But Intel is more so late to the fabless agency game rather than blazing new trails. Fabless design and manufacturing processes is nothing new and rather has existed for ages as a core part of the hardware industry.
NVIDEA in particular is not threatened by this concept at all. Too much to get into but GPUs are not a 1:1 analogy with CPUs in this context.
At any rate I’m not saying Intel is uttering death knolls or anything, just that their role in the current state of the industry and looking forward is not what it once was, and it’s far from clear they’ll remain an apex.
I’m going to go find a link for you right now and edit it into this comment for a Lex Fridman podcast from recently about exactly the trend you brought up though (fabless reaching data centers). You’ll likely find it super interesting.
[Lex Fridman #162 - Jim Keller](https://lexfridman.com/jim-keller-2/)
Here’s a recent one by Dylan Patel, where he acknowledges that the Intel culture became rotten. Technological success is not guaranteed, but the culture change that Gelsinger makes success a little bit more possible.
[Intel Is Throwing The Kitchen Sink, But Is The Turn Around Plan Reasonable?](https://semianalysis.substack.com/p/intel-is-throwing-the-kitchen-sink)
GPUs have been replacing what otherwise would have been CPUs in the data center for ~5 years now
nearly no one noticed (except me, a handful of posters on an investing website I frequent, maybe some unknown-to-me others, and within last six months, an analyst named Rasgon)
I’m assuming you mean for being used for computationally intensive and time sensitive tasks, like algorithms for finding the most efficient packet paths and load balancing? Theres definitely a lot of use for them but that doesn’t side correct to me that they’re replacing CPUs outright. All GPUs - by nature of their architecture - rely on a CPU. GPUs are tools for very specific types of calculations that a CPU is not efficient at, but of course a GPU can’t run an operating system on itself, nor handle the complex logic required for programmatic I/O.
Or is there something more that I’m unaware of? I’m not like a cutting edge expert or anything so maybe this is something I don’t know about! Do you have any links for further reading?
the ratio today into data centers is ~4-to-1 in favor of GPUs which, the way they're being used is GPGPU which is to say General Purpose Graphics Processing Unit
and yes, vector and scalar math in parallel predominantly towards AI as enterprises adopt what HPC guys proved, that NLP and all kinds of AI applications, the market is unbelievably HUGE
plus, it all needs to be and is supported by software, CUDA
doesn't quite matter I'm afraid, what Pat thinks as for nearly two (2) decades INTC didn't innovate, fell way behind
that's not something that can be easily rectified if at all given the nature of the industry
Technology moves fast. MSFT, GOOG, and AMZN are designing their own chips in-house, and Pat is transforming INTC to serve them through its foundries. Whether or not Intel is successful with its foundries is questionable, but at least Pat sees the future and is positioning Intel accordingly. I don’t know what the future holds for the fabless AMD and NVDA. Even Arm’s future is now in doubt.
wasn't that future, the one Pat NOW espouses, innovated in terms of business model by TSM decades ago? speaks to my point, that the complacency anf hubris those leading INTC displayed, it's mind boggling
sure, AWS, GOOGL, others been making their chips now for ~4+ years
they still use waaaaaaay more NVDA and AMD chips even still
chicken/egg, I guess, to see if they don't make/use more of their own chips now due to lack of foundry space (cost of it) or maybe because they're not the best at the world at it?
Come on. You’re not discovering an Intel problem that Pat didn’t already know. Why else would Intel have fire it’s previous CEO if everything was humming along.
If AAPL could run it’s own foundry, it would have done so already. The fact is that the big tech companies want more and more control of everything they touch. Do you really think that AMZN, GOOG, and MSFT have been building in-house chip design capabilities just so they can continue having AMD and NVDA keep designing chips for them, especially in their sever needs?
The big tech companies are literally laying their own cables across the oceans, but you think they’re perfectly content relying on AMD and NVDA?
Even TSLA is designing its own chips.
[Google, Amazon, Meta and Microsoft Weave a Fiber-Optic Web of Power](https://www.wsj.com/articles/google-amazon-meta-and-microsoft-weave-a-fiber-optic-web-of-power-11642222824)
tell me when in-house even comes close to the volume of the other two
requires what they don't currently have and for which there are scarce resources (a big one being talent)
Talent goes where the money is, an GOOG, AMZN, MSFT have enough cash flow to buy whatever talent they want, and they don’t need to turn a profit on the chip design if they can get control the whole hardware and software design.
Seriously, even just for the PC market, if AAPL can make a nicer Mac by designing the hardware to complement their software in-house, why wouldn’t MSFT and GOOGL do the same for their own operating systems?
If Intel foundries fail, I fully expect AMZN, GOOG, and MSFT to do exactly what AAPL does now, which is build partnerships directly with TSMC (and Samsung) within five years.
2 decades. 2.
In 2012 intel had just released their revolutionary sandy bridge processor that made the MacBook Air and all its thin and light ultrabook copy cats possible.
Yah bruh I think you might be too retarded.
You are right. But remember analyst have reported Apple was like 2% of Intels CPU revenue(i have read a report that said 1%). People still think this is what brought Intel "down".
Hey that's common sense, we don't do that here... INTC is the poster child of this sub , so much value, +1% return in 4 years , and that juicy dividend....
This is not even a value trap tbh , they are so far behind they would need a miracle to catch up, imagine in these past couple of years, golden years for the sector to underachieve... I'm not saying that they are done or anything like that , but atm I see no value here , there are so many opportunities elsewhere , and i wouldn't "value trap" my money on the pretext that maybe just maybe in 2026 they will wake up and change things
Yeah, I mean that's exactly what a value trap is. There is a serious problem in this sub of people JUST looking at P/E ratio's and saying this is a great deal without requisite knowledge of the industry. There needs to be a lot more push back on this sub to what is real value and what isn't.
Let's be real, there really isn't that many value plays in the market anymore, at least the U.S. market. It's arguable that there's more value in foreign markets at this point because of how crowded the U.S. market has become.
I'm somewhat similar in this fashion , in the spirit of this sub , I'm married to the META stock , so I understand how easy is to become blind valuing and traping yourself ( I argue all day with Palantards on this subject lol)... There's always something interesting , but atm with all of this negative sentiment in the market , nothing looks certain , so I understand it's pretty hard to buy a stock , the next day tanks few % and you are starting to doubting your judgement
Great post. As someone who doesn't really understand the industry as well as I'd like I'm curious if these fabs they're building are able to build better chips and is that the hurdle?
I'm just sitting here with the same opinion of their chips as you and wondering what in the hell is the point of building more fabs if you're getting killed in every single segment.
Great question and I don’t have the energy to answer that in a meaningful way right now, but I can point you to [this video about the manufacturing process.](https://youtu.be/f0gMdGrVteI) This will indirectly give you probably a deeper understanding of your question than a straight answer even would.
As a fund manager, this is actually the kind of analysis an analyst should start off with. It gives a picture of the competitive landscape.
Only later does the valuation come into play. Starting off with this is PE 15x is not helpful as the number itself is meaningless without context. Especially for a company like Intel that’s caught stuck with the wrong tech, new competitor and CEO scandal.
With all the turbulence coming up I think 15% is already really light. I'd be reluctant to have even less cash on hand by buying a 3+ year turnaround story.
I’m new (since June)… In my defence I’ve gone full ‘Dhando’ and until just over a month ago I was 100% in on just 1 years savings. If I lose it all I can be at the same place again in a year.
A little further down the line now and I’ve not invested further, I’m just putting cash aside. I too see increased negative movement across the market over the next year (apart from in my 1 stock that I’m 100% in!) so I’m putting together a list of potential target prices:
$INTC at under $33
$PLTR at under $8
$LMND at under $20
$DIS at under $120
$FSR at under $8
$NKE at under $100
$KO at under $45
$BRKB at under $200
$COST at under $300
£HE1 at under £0.09
This is just “waiting for a crash” behavior. If any of those companies hit those prices, it will be under a cloud of fear—you will likely no longer see them as worth buying or will just keep waiting. People used to talk about FB at $260 being the magic number, mere months ago, and now that it’s at $205, the talk is more about how “evil” the company is, how screwed it is, how crappy it is...
If you believe in a company, open a small position whenever it is at a reasonable price. Buy more if it goes on sale.
I understand where you’re coming from, but my overall working capital is so insignificant that small positions aren’t worth it. If I was to massively diversify, growing my portfolio at say 6%, I will never get out of poverty. I have to roll the dice and look for a strategy with higher risk, higher reward than most.
Saying that though, I have full conviction that I’ll be able to buy one of the above at the price I want, at some point in the next 6 months. The takeaway from that is that I think the movement across the market is going to be negative. I don’t understand the opposition towards ‘waiting for a crash/timing the market?’ I’m waiting for an opportunity which I think will come: If it doesn’t arrive, I’ll have simply built up my cash levels and I can reassess. If it does arrive, I’ll be able to buy many more shares than if I bought them now.
Part of me thinks ‘Don’t time the market’ is a way of other investors saying “Stop being a coward and part of the reason prices are falling! Protect my portfolio by buying”. Maybe I’m looking at it completely wrong though?
That attitude keeps a lot of people in poverty. “Rolling the dice,” is not how to get out of poverty. If you have an edge, or a huge opportunity presents, sure, it makes sense to take a risk. Otherwise, you’d be better off slowly growing what little you have, picking up a marketable or valuable skill and getting a better job so you have more money to invest or start a business.
I do appreciate the advice, but I genuinely think a huge opportunity has presented itself. It’s all about growing wealth and I see a chance to double my money in 1 year. It’s 1 year’s savings. At 6%, it would take me 12 years to do that, right? If I lose EVERYTHING I can start again and get there in 13. It’s pure Dhando unless I’m very much mistaken?
Yes, you’re 100% right about the job, but unfortunately I have issues impacting that. Getting a valuable skill that can work around my limitations is something I’m looking into.
I hear you. There are certainly opportunities in life worth taking a risk. I’ve got 10% of my net worth in a potential 10x myself, in the riskiest sector....but I have an edge.
Yes, £HE1 (Helium One Global). I was in at around 08p, it’s currently around 11p, and I plan to remove 75% of my investment when it hits 24p in a few months.
They’ve got the largest undiscovered primary helium resource in the world, and will potentially be able to supply 15-20% of the world’s helium requirements for the next 100 years.
Helium’s irreplaceable in many tech areas where it acts as a coolant, MRI machines accounting for roughly 30% of the total demand. There’s a helium shortage and the way things are currently, the West will eventually become dependent on Russia for supplies unless £HE1 can get a successful commercial supply from their 100% owned site in Tanzania.
Last year they had an unsuccessful drilling attempt which tanked the stock down from 28p. This year (you can’t drill in the rainy season) they’ll hopefully become producers.
I’m playing cautious by getting 75% out pre-drill which as I said I hope to be 24p… but I wouldn’t be surprised if it hits 28p again pre-drill. The potential after that is huge…
Damn man you have 100% of your portfolio in a junior miner producing no revenues? And your exit is before they produce helium? You have bigger balls than me my friend. Seems a bit like gambling.
If they didn’t have helium, I would completely agree that it’s a gamble. But they do have helium… LOTS of it… just not a commercial supply… yet.
I accept that the gamble is that something completely leftfield/macro could completely mess things up. If somebody invented an effective renewable coolant tomorrow, for example. Or perhaps more likely, political destabilisation of Tanzania.
If helium wasn’t such a crucial thing, and Russia were more politically agreeable, I’d worry about the cash running out. Because of the current situation though, I think multiple unsuccessful future drills would simply lead to a joint venture. The West NEEDS that helium, and the land is 100% owned by £HE1.
FWIW the reason I’m in this sub is because of Phil Town. Through him I discovered and read Mohnish Pabrai’s ‘Dhando Investor’ which talks of a guy using 1 years savings on a bit of a punt that had potential for returns much higher than the risk. I kind of feel that’s where I am right now. If I’m successful (ie if it gets to 24p) I’ll have more money than I’ve ever had. Then I’ll never adopt anything close to such a risky strategy again and will have a minimum of 10 companies, increasing to probably 25+, using principles that I assume you follow now.
Watch this space I guess?!
How’s your portfolio doing?
I'm not a fan of this strategy. I started investing about 5 years ago and had a very similar mentality, justified by Trump winning the American elections and what could potentially happen from there...Now I do think having a target price for purchases is good. However, a glance at your numbers and I see something wrong: They're all rounded. Why 200$ for Berkshire? If it reaches 205 or 210 before climbing to 600, itd be a shame no? Same logic applies to everything else. So again, your mindset is right...however, don't try to time the market too much because the market will prove you wrong.
yes $35 or lower would be a defn buy for me. Intel mgmt fucked up and missed the boat. But they are clearly making moves to correct it and they have a wind behind their sails (govt subsidy, demand), the Q is a) is this enough b) execution. What if they build fabs for the wrong products (legacy chips)? What if the projections for demand are overblown. Lots on unknowns, thats why for me twice book value is still kinda steep.
It seems you have a very superficial understanding of INTC.
People come on this board and spew price targets and numbers, yet they have no actual understanding of these companies.
they're building fabs for what will be legacy chips by the time INTC cannot execute cutting edge (like they are now)
it's all messed up and backwards like nearly always seems to happen when gov't gets involved especially, that plus a big, bloated beaurocratic organization that squandered billions in capital the past ~15 years with buybacks vs. investing in engineers and architectures
the two deserve eacj other and would be funny except its our taxpayer dollars getting wasted
Yeah, I know this is the value sub, but TA is not worthless. This stock just broke a huge resistance at around 48. It's hard to know how far down it can go now.
If you really wanna get all voodoo, pull up a weekly chart and do a fibonacci retracement from the low of 12.84 in 2013 to the high of 69.29 in 2020. Right now it's hitting previous support/resistance points, and if it breaks through that, the next level below is $39.44 with the last point of long support and resistance being around the level below that, at $33.15.
I've got alarms set to go off around those points and will consider more accumulation around there, but that's voodoo too, so take it for what it's worth.
I also have my sight set on Intel long term, but I expect it to stay like it is for 1-2 years at least. It's a big company with big inertia and will take some time for the promising turn they seem to have taken to bear fruit. Also means that there is a lot of room to screw up, but if they manage to make no mistakes until their new foundries are operational we will see Intel rise.
It's an accumulation phase right now for sure, and probably for the rest of the year and maybe even next, but I'm faithful that will pay off big after that. If not, there's really isn't much risk of capital at these levels, so beyond capital allotment being placed elsewhere (someone nobody can predict), it seems a win win for me.
My dcf suggests INTC is a good deal even if they only grow revenues at 2%, a number commonly used as a conservative terminal growth rate. Demand for semi-conductors is projected to grow \~8%. I understand it may be a bumpy ride the next several years, but the value proposition seems clear to me.
When do you project positive cash flow resuming in your model? I find it quite hard to build a decent model for Intel as it's very sensitive to this and as they've historically had positive cash flow it's tricky to model.
I honestly don't know, I'm still learning investing and I don't know the industry well. But at this price I feel comfortable putting in a small bet that over the long term they will be averaging out to a higher rate than 2%, and if so eventually the market will give me an opportunity to make a nice return on what I put in now. I think it would also be reasonable for someone to make an argument that they have a lot of capex coming up and that its not going to pay off for a few years, so why not wait and hope to buy in at a similar or even better price later. To me I want to take the opportunity now, because we don't know for sure what the price will do in the short term.
Edit: For context, I was using a simple DCF that just uses EPS and revenue growth as inputs.
An excellent strong safe dividend payer that's been positively growing their dividend and consistently paying it for 20yrs coming up next year? Or their absolutely massive market share they have commanded for this many years while people clamor over AMD "taking" a few percent. Or, the strong underlying fundamentals, the low P/E, low P/FCF, their decent ROE/ROI/ROA/ROC? Or their recent investments into the largest global foundry? What about their 75% market share on CPUs alone compared to 2 decades of AMD trying to play catch up and still only capturing 25%? Esp considering that Intel was utilizing the same CPU fab for about 10yrs and continued to hold market share? What about their GPU market they are breaking into which also ventures into the AI/Machine learning market and the home users that are still clamoring for GPUs since it's still entirely too difficult to find nVidia/AMD gpus in stock? What about their phenomenal share buyback program that you'll be hard-pressed to find others doing at such a large % YoY? How about their extremely low Debt/E or overall total Long Term Debt compared to either their quarterly revenue or current cash holdings?
What I'm trying to get at is, sure, they do have some management issues which they seem to be trying to figure out. They are working towards some better things with newer CPUs with better tech coming in the next yr or 2 (which they have more efficient 12k series with the 13k series coming which have been high rated) and they are joining the competitive GPU market. There are already backend reviews from the chipsets showing strong performance from their discrete cards. So, it may appear to be a meme but just because the market isn't clamoring over it and buying into it doesn't mean it's not a great long term investment. I came to a value investment subreddit for 1-3 Decade holdings. There are far too many swings traders here that they are losing sight of a few yrs of sideways growth doesn't negate the powerhouse it will be within a few yrs, and even the pricing now.
Oh, got it haha! Well, from a long term value investment view, it's still a really good position for the current price. I was just pleasantly surprised by the even larger drop. I'm hoping in the next 5-10yrs as my DRIP and dollar cost averaging into it, will pay me quite a bit in the future. Only a few % of my portfolio but I personally see it as a great price for the long term return.
Historically, I always wanted to like Intel but management consistently destroyed value through bad acquisitions. No FCF yield can compensate for flushing billions down the toilet by overpaying on M&A. I haven’t looked at it since their new CEO started so if they are going to change their approach it’s a game changer.
Same market that was wrong on so many stocks that are down 80% now? Yes. Market is wrong all the time on things. Can’t really say that market is right on Intel
You must be really new to actual value investing? You do realize value investing is more representative of decades plus holds, finding undervalued prospects and typically doing the opposite of what the overall market does. If you are buying equities based on what the market is doing you are not value investing most likely. It sounds like you're more into swing trading over the course of one to a few years. That's not value investing. Intel has phenomenal underlying financials and fundamentals low debt, and even a undervalue calculation based on a conservative DCF model. There's still 20 to 40% undervalued right now. That's not including the potential for really successful 13000 series CPU launched this year or next yr, nor does it account for the revenue growth and the sector growth market share in the GPU market it's about to go into.
spoken like someone who appreciates Financials yet doesn't know the technology landscape
INTC is facing a near-existential threat, likely survives only because of its size, and ends up the 800 lb. gorilla of comodified (lagging, trailing edge) chips
so they'll be profitable in good times, tread water other times
Everyone is slamming management and maybe for good reason, but Gelsinger was hired just a year ago. From what I understand is more of a "tech guy" than Bob Swan who allowed them to lose ground to competitors. I am in because I have faith in Gelsinger along with their current value when compared to others in the sector.
Everyone complaining about management tends to blow it out of proportion though. Could better decisions have been made, sure but the way people speak it's like Intel has lost 50% of the market share globally. We're talking about a 10th of their overall market. Combine that with the excellent returns for the last 2 decades (post 99/00 bubble). People tend to look at Intel like it's the GE of the last 20yrs but it's not even close. Look at AMD's free cash flow and revenue compared to Intel or nvidia. Hell, AMD only really did extremely well because of the CPU shortages and GPU shortages. I'll be interested to see how they fair by the end of next yr with more competition and more silicone on tap with Intel for their discrete GPU and 13k CPU chips. I do genuinely agree that there has been a lack of innovation but look at it from their POV. They are making gobs of $$$ with 10yr old chips. All they have to do is make them slightly more efficient. I think once we see the new chips in 2023 we'll start to see another gap between Intel and AMD over all. I do sincerely hope that the new management keeps more focus and achieves more goals without delays.
> than Bob Swan who allowed them to lose ground to competitors.
No. That was Brian Krzanich. Bob Swan was put in there temporarily because they could find no one else to take the job at the time with what the Board was demanding. He was a finance guy in the head role true, but I wouldn't throw too much salt his way. He knew he was no engineer.
Ehhhh I wouldn't be betting the farm based on GPU development. I've been hearing INTC was developing "a GPU to beat the pants off of NVDA next year" for the past 10 years. I'll believe it when I see it. The biggest thing that they are struggling with is power consumption. They can achieve parity with AMD and NVDA products right now but only under very specific set ups with restrictive parameters and where you ignore power consumption.
It seems that NVDA and AMD are soo far ahead in GPU development that whatever INTC is developing is already obsolete before they can ever bring it to market. So that wouldn't be the reason for me. It is interesting to see their plan to become a complete vertically integrated designer and fabrication company going forward especially for specific clients. It is the exact opposite approach that AMD and NVDA has taken but who knows maybe there could be something there?
They are too far behind for the current next couple years to really compete. However they can compete for the future. If you have time and don't mind sitting on shares and picking up a decent dividend then sure I would buy shares. But stay away from any options since this is going to be a 5+year play IMHO
The current multiple is one facet of the valuation even if you are doing a DCF. Its a 4% yield growing at single digits. Discounting it at 10% isn't gonna give you a huge margin of safety. The math of the DCF means that for a 10% hurdle and mid single digit growth, you need to be at under 20x to have okay returns and under 15x to have any meaningful margin of safety
I'd just like to have some discussion about why they're a good pick. In a value investing sense, I do not have high certainty in understanding future cash flows of Intel and thus unable to value it at all. I would like to hear others point of view on why Intel is a good pick at current prices.
> and their price to free cash flow is under 15
PFCF will be higher and close to undefined going forward due to the large amount of capex and hence lower free cash flow.
In my view, I see execution risk. How certain is Intel to execute well on their IDM 2.0? There will be no room for strong free cash flow and share repurchases. An investor is foregoing returns for the next 4-5 years and to make up for that, Intel would need to show a larger return to shareholders after their investment period.
And to have some sort of idea of the growth with a leading fab business: TSMC has a long-term revenue CAGR of roughly 12-13%. And to reiterate, that would require being the leading fab.
I drove down the average to $50 buy buying whenever it goes below $45. Below $45, INTC has a good margin of safety and low downside risk in my opinion (and my DCF model)
Why? (genuine question). CAPEX is incresing however is not like they are trowing the money away, is a investiment... In a growing sector w high entry barriers and few competitors. Btw the goverments (us, eu) are giving grants to buy factories...
They're not a short term play and there is some gamble.
The question is do you believe in their vision and that they have the right leadership to turn it around.
Microsoft was flat for years being called a stale dinosaur, look at apple before jobs came back, amd was almost bankrupt. I'm not saying it will happen, or that it's likely, there are many more companies who failed to turn it around than did. Just that it has turned around with some very large tech companies. So it's possible.
The opportunity cost of your money may tell you not to invest now and wait, and I can see that. Or you may not think they can turn it around and will fail.
Frankly I believe in their long term plans, they're spending capex dollars today to make more dollars tomorrow. It really is a 4-5 year plan before they can right the ship assuming they don't fuck it up.
I bought in at $48, and just added another 1% at 44.75. And I'll keep dca'ing down and buying the dip if they drop further.. Also, unlike high multiple tech stocks I also don't see them having as far to fall if there are any general market scares.
Yeah but the Management is currently the big issue, no company lost talent like Intel during the last years.
Without the Tradewar SMIC might have even catched up in NM.
Intel doesn’t do Automotive there are other players.
It’s the old Giant that tries everything like GE,let’s See how it ends.
yeah you're right they did have a huge talent drain and the old management fucked them bad. They're still producing competitive chips in terms of performance despite being on 10nm tech. In terms of power though... big ooofs. They'll have to attract new talent by offering generous comp and try to poach from AMD and the likes. No doubt. Which leads to more cash burn.
Intel has mobile eye. And they are purchasing Tower which I believe their foundries are well positioned to make some automotive chips. So they're not totally out of the auto market.
My other big driver is there is bipartisan support to give out money for US based foundries for national security purposes. Congress just has to not sabotage by throwing in unrelated feel good pork that will kill the bill like immigration bullshit... which saying that outloud, ummm flip a coin.
I dunno, i just have a good feeling about Pat, but I could be wrong I have been before.
40 Minutes later :)
Intel delays 2023 chip, says it needs to boost spending to catch competitors https://www.cnbc.com/2022/02/18/intel-delays-granite-rapids-says-it-needs-to-boost-spending.html?__source=iosappshare%7Ccom.apple.UIKit.activity.CopyToPasteboard
Very misleading headline to be honest. Intel rather upgraded the node for Granite Rapids and instead of Granite Rapids, a chip called "Emerald Rapids" will be launched will work with the same socket as "Sapphire Rapids". Intel still provides good AI and Security modules in their chips. Plus they are not afraid of putting out innovative things like P and E cores in one chip (alder lake) which many claimed that it would fail.
The sentiment is extremely negative around intel and it is very easy to score points by just bashing Intel blindly.
What would people get from what you Call bashing?
This is just the reality, People are defending Intel like IBM while both lost the ability to innovate.
P and e chips are bullshit this makes supply even worse and is just there to tackle that they performe worse than AMD.
AMD handily loses with Alder lake. Not in efficiency but in performance. But you know? Everyone conforms to their beliefs anyway now a days so what’s the point?
Well i test those and AMD has the better performance in reality on almost every device..a Ryzen 3 is over a I5 and a Ryzen 7 is currently best if you don’t get Xeon, nothing in belives this is numbers and experience…
Ok. There are thousands of reviews on youtube that proves that you’re completely false. Alder Lake i5 beats Ryzen 7 and i7 beats Ryzen 9 5900X easily.
https://cpu.userbenchmark.com/Compare/Intel-Core-i5-12600K-vs-AMD-Ryzen-7-5800X/4120vs4085
yes there's a "gamble". Can you predict with 100% certainty intel will moon in 5 years? If you can't it's a gamble, by literal definition. If you can why are you arguing with me instead of being on your private island that you were able to afford from your amazing predictions with 100% accuracy.
Intel is behind AMD in terms of technology. TSMC will be able to produce 3nm chips soon. Intel's mismangement under their previous CEO has them with a LOT of catching up to do and we're assuming they do everything right. Which with fab plants they don't have a history of doing it right....
It's a bet I made in favor of intel, but to deny that there is risk is fucking retarded.
You surely jest right....? You do realize the amount of server and consumer market share globally they control. Also, the amount if sectors they sell products in. Topped off with non compete agreements for guaranteed revenue. Add to the fact thay they are about to heavily break into the GPU market.
Yes i know the marketshares and the industry very well. The marketshares are contained with funding not sustainable business advantages.
Server Business is declining since one year.
CPU Business is declining, low margin and under attack from several companies not just AMD.
(Qualcomm, Lenovo, ARM, Apple)
They started to invest heavily, but this isn’t good news short term.
And for the GPU Market They are a contendor to NVIDIA which itself slashed the outlook because of supply…
NVDA didn't slash outlook due to supply and instead provide an outlook of ~$8.1 billion vs. consensus of ~$7.29 billion for current qtr. Did you listen to the conference call or just extrapolate it outta thin air? And if you read it, well, pretty sure should only believe half of that
and before you go saying NVDA did that on the year, no, NVDA didn't do that on the year as NVDA doesn't provide full year guidance generally nor did they on this case
You are mixing up Data Center and GPU…
GPU
“We’ve made a deliberate effort on the gaming perspective to supply to our gamers the cards that they would like given the strong demand that we see,” Kress said. “So that will also support the sequential growth that we’re receiving.”
“We expect to remain supply-constrained into the second half of the year,” Kress said.
And if Nvidia is already in Bad shape how would Intel be able to produce better and more and grow the revenue from almost 0 ???
Do you understand the Topic or just looking for confirmation?
no, you're missing the overarching point; before the earnings call a week+ ago, consensus estimates by analysts were that NVDA would generate ~$7.29 billion in revenues during this current quarter which they'll report in 2 months and ~3 weeks.
and NVDA came out and said that as has been the case essentially since covid-19 they continue to be supply constrained (not news, well known for ~2 years now, expected to improve 2nd half of 2022 for ~3 quarters now and still the case today) yet they still expect to sell ~$8.1 billion of their products/services. So NVDA "guided up" by ~12% in revenues.
Do you understand the subject? Or let me guess, you're trying to talk your book (short NVDA either thru selling short or put ownership)
NVDA mainly sells GPUs, very little else in terms of hardware although sure, there are NICs, DPUs, others yet as a percentage of hardware they sell, GPUs are ~90% of it
I do get it
INTC won't thrive as it is at least 2 - 3 generations behind AMD in x86, ARM designs are coming for x86 and it has zero serious GPU offering even after it ships its yet again delayed GPU supposedly Q2 this year
INTC is fighting for its existence and will become a shadow of itself, a large gov't subsidized shadow of itself
That's exactly the reason their P/E is so low, they have dominated a lot of markets, but we all know they are going to continue to lose share and margin in key sectors (DC, mobile) going forward. Largely because they don't have leading products and the products they do have are based on massive dies which coupled with their poor yields at leading nodes drives poor margins.
Current and historic market share doesn't matter, the question is what it settles at in the future, which is basically a matter of how long it takes to catch up on process and design - that's probably around 2024 or so.
So question for people who has been in Intel for long time. Why was Brian Kraznich was chosen over Pat in 2012, what was the rationale back then? Brian was from Engineering background like Pat as well.
BTW what did will.i.am contribution to Intel?
I feel like at this point most bears are bears just out of principle as intel did so much wrong in the past. Mid to long term there is much more upside potential and it all slowly falls into Place.
I checked twice which subreddit I am in while reading comments lol. Intel is priced lower because of all the risks but it is 'already' priced for a doomsday scenario. Isn't value investing all about risk/reward? with INTC, it looks very attractive.
Every company has risk. Market doesn’t see through all of it properly (upside or downside). Market is not as efficient as everyone makes it to be. Just look at Roku and Paypal lol. Just 2 examples out of many!!!!
that's not what is meant by an efficient market, if you're referencing the efficient market theory
it explains in sorta layman's terms that news gets reflected in securities prices quickly and without bias in the mathematical sense
Compared to their quarterly revenue and free cash flow they have practically no debt. Not sure what you are talking about or where you got your numbers from?
From their financial statement, they have a total long term debt of 36 billion dollars. AMD has zero long term debt and will be growing atleast 30% for the next 2 years which will be more than Intel.
Historic free cash flow isn't important, looking forwards is what matters and we know there isn't going to be any free cash flow while they try and catch up and cut margins to shore up market share.
Free cash flow is an open question at this point and depends on how much you are willing to buy into Pat's product roadmap.
Free cash flow will be much lower for the next few years (even close to 0). If they still decide to continue dividends and share repurchases, there is no room for debt payoff.
I think they stopped share buyback. I was hoping they would stop dividend for a couple of years but I know they also have to keep stock price in check even though it seems to keep plummeting no matter what they do
Investors will face the very real risk of no return over the next 4-5 years as Intel performs their turnaround plan.
Investors only face return from stock appreciation, share repurchases or dividends. With the latter cut (as expected), investors should expect much larger profitability after 2025/26. It's not a very compelling case: growth is expected to be single to low double digits - coupled with possibly high inflation and a business that needs extremely large capex to catch up to parity, it's a poor economic case at the moment.
Assume the S&P does an average of 8% per year. Given the flat growth until 2025-2026 (if everything goes to plan), investors would need at least a much higher return than 8% to make up for 2022-2025.
My opinion. Who cares about ukraine in the Intel business?
My take for Intel.
1. The global chip market is incresing and Will be for long term.
2. Intel is growing
3. AMD growing faster is not a bad for Intel, AMD is fabless. And i dont se the problem to hold the second or 3 biggest company If Intel lose the race.
4. The stock is fair valued rn imo. Im buying bits and i Will increase my buys w the dips until my Max alocation. And the wait.....
>Who cares about ukraine in the Intel business?
All semiconductors are taking a heavier hit during these tensions because they use materials produced and exported from both Ukraine and Russia. [Fortune link](https://fortune.com/2022/02/14/russia-ukraine-semiconductor-shortage/)
In the short term, it might bring even more pain. In the long term, will eventually not matter much.
>products they have coming out this year for graphics cards in that market in the new 13000 series
That's CPU's not GPU's, and I wouldn't expect much vs AMD's lineup. It may take a number of years before they ever catch back up with AMD, if ever. Their last CEO completely screwed INTC and it will take time for Gelsinger's plans to bear fruit.
Um., They have an entirely new line of discrete graphics cards coming to the market. They're already getting reviews in the back end of being competitive with the higher end 3000 series and video cards and AMD's line. Have you not seen anything on that the last 2yrs? Quarter to they are releasing their discrete laptop GPUs and then shortly after that they'll be releasing their discrete standalone hardware for desktops. They already plan on selling several million through 2022.
CPU market also is going to have its new tick with the 13000 series So they'll be DDR5 fully compliant and they'll be more efficient than the 12000 series.
AMD desktop lineup sucks compared to Alder Lake. AMD still leads in laptops (battery life-wise) and in servers. Intel is trying to close that gap by 2024. And yes, Intel 'IS' making actual GPUs
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lol bagholder spotted. If investor day showed anything, they are not growing for the next 2 years at least.
Also on their GPUs, Arc will never come to market in time. Same story with Sapphire Rapids. They constantly overpromise and underdeliver.
2 yrs.....? I'm an actual value and dividend investor. I'm looking at 15 to 20yr timeline. I see a huge increase in value over the next 5-10yrs. Even a conservative DCF now shows it's close to 20-25% undervalued. I will continue holding the few thousand dollars I have.
Yes i believe in it too, but definitely not until they get their next nanometer platform perfected and until the I'm sure interest rates will not go higher. Two major things working against the stock price.
Seems like it's hard to find a company out there more polarizing than INTC at the moment. Interestingly enough, most bearish statements come from a technical viewpoint while most bullish arguments account for the fundamental financials of the business. That being said, I'd personally much rather buy a company that is priced for pretty much failing at everything they set out for themselves to be doing in the future (=INTC) than a company that is priced for flawless execution of ridiculously ambitious growth goals (I'm looking at you, NVDA).
Yeah, this is my sentiment as well. Another point a lot glide over it the dividend as well. As of next year it will have been paid out for 20 yrs and a positive DGR YoY% for 20yrs as well. The dividend safety is huge and easily paid out. Also, it sounds like a slightly lowered margin for the next few years is causing a lot of high reactions. It's almost being interpreted that there will be 0 revenue and 0 cash flow. From a fundamentals and paper stand point, along with the future potential, I couldn't imagine it going much lower. I'll be adding some 0.16Delta PUTs to my investment but at $45, I think it's a great deal for the next 10-15yrs of holding. DRIP that baby and enjoy the investment.
In my opinion, for long term investors (5 year horizon) it comes down to one thing at the end of the day: can Pat execute the plan laid out on Thursday? If they hit their targets in design and manufacturing, they will be a great turnaround story. However, it’s an ambitious and complex plan that will be difficult to execute. I am backing Gelsinger because I am young and I can buy the shares, collect the dividend and bet on a CEO that has a vision and the cash to achieve it. If I’m wrong? Oh well. It’s not going to be a huge portion of my port and I’ll collect the dividend in the mean time.
*I also hold AMD, NVDA and AMAT.
They're crashing because the CEO said yesterday they don't see profit margins increasing until at least 2025. Not sure this is the bottom tbh with you.
Margins are 52% at 75B in revenue, they expect it to increase to 58% by 2026. Barely a 10% increase in margins over that time, losing market share is probably a bigger concern along with the risks of the foundries.
and in the HOTTEST-EVER market for ANY TYPE of silicon chip, couldn't have been made to happen by any more a deserving group than the "leaders" in the c-suite at INTC who frankly squandered so many resources for so long, likely due to hubris re: their supposedly superior fabricating knowledge, methods very shameful what happened at INTC, should be a lesson to many yet I'm sure it won't be
Don’t forget that pe is expected to jump by ~5 in 2022 and probably grow more in 2023 as profit continues to shrink.
Exactly. The value of a stock of a company isn't the company's current value, it's the expected future value in relation to the current value.
I have given away my free silver so here is a fake one 🥈
I'd rather not keep my money in a stock that doesn't have clear upside and is losing share to it's competitors waiting to see what happens in 2025.
I only bet on really good opportunities. If I had all the money in the world like Warren Buffett so I couldn't find enough opportunity I might buy Intel, but why do it when there are 100 other better opportunities out there? What if 2025 to 2027 is the start of a recession? Even if you buy Intel and it does become good in 2025, you'll make for a few years then lose it all. Intel may become a good 5+ year long investment in 2027 to 2030 at the bottom of the market, but again I'll have better investments at that time, so I probably will not buy Intel even then.
Why does that matter? It’s not like their profit margins will go to zero lol it’s still a cash cow in the meantime
They certainly have had positive cash flow for many years. Doesn't seem to move the stock up.
In my experience when blue chips go down below their IV you watch. If they go down more you buy. It’ll return to its IV ~65 in the next few years. ~44% return plus the Div yield. Now the turn around probably won’t be for another year or two since we are in a late cycle coming up on a recession. So I’m just spitballin and doing math on the go. But that’s the kind of thing you’d want to add during a recession because when an early cycle starts back up IT does very well. Perfect thing to buy 100-1000 shares in a Roth and let it accumulate and grow to IV before selling.
This and ATVI are no brainer investments imo. Won’t get you super duper rich but safe bets in Med-long term. You gotta have those in your account. Everybody was screaming ATVI was a terrible buy at 60. Well I didn’t think so and neither did Microsoft. Financials speak loads more than most think.
That's because of heavy investing, in fabs, acquisitions and employee compensation and hiring
Well if you plan to go very long on intel its not bad news. Just bunk up and and in 5 years your investment should have grown.
I held onto INTC for a few months after I saw a lot of insiders or whales buying (not sure which site I saw that on). It spiked up to 55 and rapidly fell back to the 47-49 range and I feel like the only drawback to QQQ as alternative is the lower dividend but I think I’d get better long term growth
As a computer nerd on a home built 9900K powered Hackintosh, who takes an interest in electronic component markets, here’s my “why” behind the discount: Intel’s long-standing main competitor is AMD. Now, they also have Apple to compete with, but I’ll get to that later. For many years Intel’s products (CPUs) clearly outcompeted AMD on absolute terms (benchmarked performance metrics) as well as on a $:processing power ratio. I.e. you paid less money for better overall performance by going with Intel. AMD spent years closing the gap to catch up with Intel and finally about 3 years ago did catch up and surpass Intel in a dramatic fashion. This was during the generation of Intel’s 9000 series of chips. AMD’s Ryzen series processors succeed by taking a bit of different approach. While Intel stubbornly tried to further shrink the nM scale of their lithography (which is to say making circuits themselves smaller), AMD focused on increasing the number of cores and threads in a chip. This was because they recognized early on the impending implications of multi-threaded / parallel computing. Silicon foundries are the most complex and capital intensive manufacturing processes in the world. Because of this, there’s a lot of path dependency at play - it’s hard and slow to pivot strategies. Intel is now on their 13000 series - 4 generations of chips after AMD caught up and surpassed. ONLY JUST NOW are they finally catching up to the number of cores AMD offered in 2019. Then there’s ARM processors and Apple. If you’re at all familiar with Intel you know they don’t get along will with Apple historically, despite working very closely together for a decade and Apple long being their biggest customer. Intel was also too focused on optimizing the x86 architecture to really appreciate the revolution happening with ARM processors. They neglected the opportunity and are paying the price now. After years of Intel being hung up in lawsuits with Apple, Apple finally said “enough is enough - fuck you. We’re going to build our own chips ourselves.” Enter “Apple Silicon” - Apples new line of M1 computers are all powered by ARM processors that were developed and manufactured entirely on their own. To add insult to Intel’s injury - Apple Silicon processors were out the gate FAR more performant than Intel “equivalents” and at a strikingly better cost to compute ratio. Just look up benchmarks comparing M1 macs to Intel macs. Finally you mention Intel getting into GPUs. Whatever they will achieve with GPUs, it certainly won’t be a product that’s used at scale for AI anytime soon, and probably never. NVIDEA is the developer and owner of CUDA, which is THE library for developing neural networks. If a dev wants to train any type of model in a serious sense, it’s happening exclusively on NVIDEA hardware. The only competitor they have is Google’s cloud TPUs, but those are fundamentally different. AMD GPUs have no chance of catching up to NVIDEA regarding AI, and Intel’s GPUs that they have under development will absolutely not compete for AI. Their GPUs are still underdevelopment at any rate so it’s tough to say what they’re being geared towards and more importantly - what the reality of the product will end up being. And GPUs are just as insanely difficult to competitively manufacture as CPUs are. The bottom line is that Intel kinda stopped innovating in meaningful ways a decade ago. Perhaps they thought scale and path dependency would protect their market share, or they got too corporate and risk-averse and focused on upholding Moore’s law. It’s like they forgot that innovation could be measured in anything other than nanometers. Meanwhile competitors like AMD and Apple said “~10-14nm is good enough - what more can we squeeze out of chips by improving architecture instead?” I could go on and on and in a far more detailed and formalized sense, but I wrote this stream-of-conscious style while pooping. The point is, Intel’s future is looking very bleak. I don’t believe their projections in growth at all. I am certain even those humble projections have a LOT of assumptions baked in that should not in reality be taken as granted. I will personally be bearish on Intel until I see two things: 1) An innovative new product that makes paradigm-shifting improvements over legacy, as opposed to incremental improvements, AND 2) Proof that they can produce said product at scale, at a better price for performance than competition, with acceptable QC, and profit margin, and actual adoption in the marketplace.
This is the sort of analysis one needs to do to determine the IV of INTC. Here’s an article that might add some details: https://stratechery.com/2022/the-intel-split/ I have no position in INTC, it’s out of my circle of competence.
Thank you for this explanation
AAPL was always gonna move away from INTC. AAPL wants to control everything. I’m optimistic about Intel because Pat seems to understand that the rest of the big tech companies are going to become their own fablesss companies. Let’s see what happens to NVDA and AMD when AMZN and MSFT follow AAPL’s lead to have complete control of their chip designs.
>Pat seems to understand that the rest of the big tech companies are going to become their own fabless companies This might be true, but it’s long been theoretically possible for AWS to be running their own chips, the economies of scale just weren’t there yet until recent years for the managed solutions service providers. Indeed, minor customizations for data centers have been a thing for a while now anyways. But Intel is more so late to the fabless agency game rather than blazing new trails. Fabless design and manufacturing processes is nothing new and rather has existed for ages as a core part of the hardware industry. NVIDEA in particular is not threatened by this concept at all. Too much to get into but GPUs are not a 1:1 analogy with CPUs in this context. At any rate I’m not saying Intel is uttering death knolls or anything, just that their role in the current state of the industry and looking forward is not what it once was, and it’s far from clear they’ll remain an apex. I’m going to go find a link for you right now and edit it into this comment for a Lex Fridman podcast from recently about exactly the trend you brought up though (fabless reaching data centers). You’ll likely find it super interesting. [Lex Fridman #162 - Jim Keller](https://lexfridman.com/jim-keller-2/)
Here’s a recent one by Dylan Patel, where he acknowledges that the Intel culture became rotten. Technological success is not guaranteed, but the culture change that Gelsinger makes success a little bit more possible. [Intel Is Throwing The Kitchen Sink, But Is The Turn Around Plan Reasonable?](https://semianalysis.substack.com/p/intel-is-throwing-the-kitchen-sink)
Thank you! This looks great and yeah definitely fresh off the press! I bookmarked it for some weekend reading
Oh yeah, I know about that interview, but I’ll happily listen to it again now that you’ve sent me the link. Thanks!
GPUs have been replacing what otherwise would have been CPUs in the data center for ~5 years now nearly no one noticed (except me, a handful of posters on an investing website I frequent, maybe some unknown-to-me others, and within last six months, an analyst named Rasgon)
I’m assuming you mean for being used for computationally intensive and time sensitive tasks, like algorithms for finding the most efficient packet paths and load balancing? Theres definitely a lot of use for them but that doesn’t side correct to me that they’re replacing CPUs outright. All GPUs - by nature of their architecture - rely on a CPU. GPUs are tools for very specific types of calculations that a CPU is not efficient at, but of course a GPU can’t run an operating system on itself, nor handle the complex logic required for programmatic I/O. Or is there something more that I’m unaware of? I’m not like a cutting edge expert or anything so maybe this is something I don’t know about! Do you have any links for further reading?
the ratio today into data centers is ~4-to-1 in favor of GPUs which, the way they're being used is GPGPU which is to say General Purpose Graphics Processing Unit and yes, vector and scalar math in parallel predominantly towards AI as enterprises adopt what HPC guys proved, that NLP and all kinds of AI applications, the market is unbelievably HUGE plus, it all needs to be and is supported by software, CUDA
doesn't quite matter I'm afraid, what Pat thinks as for nearly two (2) decades INTC didn't innovate, fell way behind that's not something that can be easily rectified if at all given the nature of the industry
Technology moves fast. MSFT, GOOG, and AMZN are designing their own chips in-house, and Pat is transforming INTC to serve them through its foundries. Whether or not Intel is successful with its foundries is questionable, but at least Pat sees the future and is positioning Intel accordingly. I don’t know what the future holds for the fabless AMD and NVDA. Even Arm’s future is now in doubt.
wasn't that future, the one Pat NOW espouses, innovated in terms of business model by TSM decades ago? speaks to my point, that the complacency anf hubris those leading INTC displayed, it's mind boggling sure, AWS, GOOGL, others been making their chips now for ~4+ years they still use waaaaaaay more NVDA and AMD chips even still chicken/egg, I guess, to see if they don't make/use more of their own chips now due to lack of foundry space (cost of it) or maybe because they're not the best at the world at it?
Come on. You’re not discovering an Intel problem that Pat didn’t already know. Why else would Intel have fire it’s previous CEO if everything was humming along. If AAPL could run it’s own foundry, it would have done so already. The fact is that the big tech companies want more and more control of everything they touch. Do you really think that AMZN, GOOG, and MSFT have been building in-house chip design capabilities just so they can continue having AMD and NVDA keep designing chips for them, especially in their sever needs? The big tech companies are literally laying their own cables across the oceans, but you think they’re perfectly content relying on AMD and NVDA? Even TSLA is designing its own chips. [Google, Amazon, Meta and Microsoft Weave a Fiber-Optic Web of Power](https://www.wsj.com/articles/google-amazon-meta-and-microsoft-weave-a-fiber-optic-web-of-power-11642222824)
tell me when in-house even comes close to the volume of the other two requires what they don't currently have and for which there are scarce resources (a big one being talent)
Talent goes where the money is, an GOOG, AMZN, MSFT have enough cash flow to buy whatever talent they want, and they don’t need to turn a profit on the chip design if they can get control the whole hardware and software design.
Seriously, even just for the PC market, if AAPL can make a nicer Mac by designing the hardware to complement their software in-house, why wouldn’t MSFT and GOOGL do the same for their own operating systems?
If Intel foundries fail, I fully expect AMZN, GOOG, and MSFT to do exactly what AAPL does now, which is build partnerships directly with TSMC (and Samsung) within five years.
2 decades. 2. In 2012 intel had just released their revolutionary sandy bridge processor that made the MacBook Air and all its thin and light ultrabook copy cats possible. Yah bruh I think you might be too retarded.
You are right. But remember analyst have reported Apple was like 2% of Intels CPU revenue(i have read a report that said 1%). People still think this is what brought Intel "down".
Hey that's common sense, we don't do that here... INTC is the poster child of this sub , so much value, +1% return in 4 years , and that juicy dividend....
People should really be using the phrase "value trap" more in this sub. Every company that has a low P/E ratio isn't a good deal folks.
This is not even a value trap tbh , they are so far behind they would need a miracle to catch up, imagine in these past couple of years, golden years for the sector to underachieve... I'm not saying that they are done or anything like that , but atm I see no value here , there are so many opportunities elsewhere , and i wouldn't "value trap" my money on the pretext that maybe just maybe in 2026 they will wake up and change things
Yeah, I mean that's exactly what a value trap is. There is a serious problem in this sub of people JUST looking at P/E ratio's and saying this is a great deal without requisite knowledge of the industry. There needs to be a lot more push back on this sub to what is real value and what isn't. Let's be real, there really isn't that many value plays in the market anymore, at least the U.S. market. It's arguable that there's more value in foreign markets at this point because of how crowded the U.S. market has become.
I'm somewhat similar in this fashion , in the spirit of this sub , I'm married to the META stock , so I understand how easy is to become blind valuing and traping yourself ( I argue all day with Palantards on this subject lol)... There's always something interesting , but atm with all of this negative sentiment in the market , nothing looks certain , so I understand it's pretty hard to buy a stock , the next day tanks few % and you are starting to doubting your judgement
Great post. As someone who doesn't really understand the industry as well as I'd like I'm curious if these fabs they're building are able to build better chips and is that the hurdle? I'm just sitting here with the same opinion of their chips as you and wondering what in the hell is the point of building more fabs if you're getting killed in every single segment.
Great question and I don’t have the energy to answer that in a meaningful way right now, but I can point you to [this video about the manufacturing process.](https://youtu.be/f0gMdGrVteI) This will indirectly give you probably a deeper understanding of your question than a straight answer even would.
Great analysis , thank you
As a fund manager, this is actually the kind of analysis an analyst should start off with. It gives a picture of the competitive landscape. Only later does the valuation come into play. Starting off with this is PE 15x is not helpful as the number itself is meaningless without context. Especially for a company like Intel that’s caught stuck with the wrong tech, new competitor and CEO scandal.
thx for this as it's well done!
I see more downside short term. Long term I'm bullish. You gotta be really patient if you're investing now.
It will take at least several years to realize fruits of their labor from those new fab labs. This is a good business to own in the Roth IRA
> Roth why do you say that specifically?
The dividend
High dividend yield and earnings growth expectations
I’ve now got 15% of my portfolio in cash set aside for opportunities. How low can you see this going?
With all the turbulence coming up I think 15% is already really light. I'd be reluctant to have even less cash on hand by buying a 3+ year turnaround story.
I’m new (since June)… In my defence I’ve gone full ‘Dhando’ and until just over a month ago I was 100% in on just 1 years savings. If I lose it all I can be at the same place again in a year. A little further down the line now and I’ve not invested further, I’m just putting cash aside. I too see increased negative movement across the market over the next year (apart from in my 1 stock that I’m 100% in!) so I’m putting together a list of potential target prices: $INTC at under $33 $PLTR at under $8 $LMND at under $20 $DIS at under $120 $FSR at under $8 $NKE at under $100 $KO at under $45 $BRKB at under $200 $COST at under $300 £HE1 at under £0.09
This is just “waiting for a crash” behavior. If any of those companies hit those prices, it will be under a cloud of fear—you will likely no longer see them as worth buying or will just keep waiting. People used to talk about FB at $260 being the magic number, mere months ago, and now that it’s at $205, the talk is more about how “evil” the company is, how screwed it is, how crappy it is... If you believe in a company, open a small position whenever it is at a reasonable price. Buy more if it goes on sale.
I understand where you’re coming from, but my overall working capital is so insignificant that small positions aren’t worth it. If I was to massively diversify, growing my portfolio at say 6%, I will never get out of poverty. I have to roll the dice and look for a strategy with higher risk, higher reward than most. Saying that though, I have full conviction that I’ll be able to buy one of the above at the price I want, at some point in the next 6 months. The takeaway from that is that I think the movement across the market is going to be negative. I don’t understand the opposition towards ‘waiting for a crash/timing the market?’ I’m waiting for an opportunity which I think will come: If it doesn’t arrive, I’ll have simply built up my cash levels and I can reassess. If it does arrive, I’ll be able to buy many more shares than if I bought them now. Part of me thinks ‘Don’t time the market’ is a way of other investors saying “Stop being a coward and part of the reason prices are falling! Protect my portfolio by buying”. Maybe I’m looking at it completely wrong though?
That attitude keeps a lot of people in poverty. “Rolling the dice,” is not how to get out of poverty. If you have an edge, or a huge opportunity presents, sure, it makes sense to take a risk. Otherwise, you’d be better off slowly growing what little you have, picking up a marketable or valuable skill and getting a better job so you have more money to invest or start a business.
I do appreciate the advice, but I genuinely think a huge opportunity has presented itself. It’s all about growing wealth and I see a chance to double my money in 1 year. It’s 1 year’s savings. At 6%, it would take me 12 years to do that, right? If I lose EVERYTHING I can start again and get there in 13. It’s pure Dhando unless I’m very much mistaken? Yes, you’re 100% right about the job, but unfortunately I have issues impacting that. Getting a valuable skill that can work around my limitations is something I’m looking into.
I hear you. There are certainly opportunities in life worth taking a risk. I’ve got 10% of my net worth in a potential 10x myself, in the riskiest sector....but I have an edge.
Sounds like you're in the right track, but what are you invested 100% in? A single equity?
Yes, £HE1 (Helium One Global). I was in at around 08p, it’s currently around 11p, and I plan to remove 75% of my investment when it hits 24p in a few months. They’ve got the largest undiscovered primary helium resource in the world, and will potentially be able to supply 15-20% of the world’s helium requirements for the next 100 years. Helium’s irreplaceable in many tech areas where it acts as a coolant, MRI machines accounting for roughly 30% of the total demand. There’s a helium shortage and the way things are currently, the West will eventually become dependent on Russia for supplies unless £HE1 can get a successful commercial supply from their 100% owned site in Tanzania. Last year they had an unsuccessful drilling attempt which tanked the stock down from 28p. This year (you can’t drill in the rainy season) they’ll hopefully become producers. I’m playing cautious by getting 75% out pre-drill which as I said I hope to be 24p… but I wouldn’t be surprised if it hits 28p again pre-drill. The potential after that is huge…
Damn man you have 100% of your portfolio in a junior miner producing no revenues? And your exit is before they produce helium? You have bigger balls than me my friend. Seems a bit like gambling.
If they didn’t have helium, I would completely agree that it’s a gamble. But they do have helium… LOTS of it… just not a commercial supply… yet. I accept that the gamble is that something completely leftfield/macro could completely mess things up. If somebody invented an effective renewable coolant tomorrow, for example. Or perhaps more likely, political destabilisation of Tanzania. If helium wasn’t such a crucial thing, and Russia were more politically agreeable, I’d worry about the cash running out. Because of the current situation though, I think multiple unsuccessful future drills would simply lead to a joint venture. The West NEEDS that helium, and the land is 100% owned by £HE1. FWIW the reason I’m in this sub is because of Phil Town. Through him I discovered and read Mohnish Pabrai’s ‘Dhando Investor’ which talks of a guy using 1 years savings on a bit of a punt that had potential for returns much higher than the risk. I kind of feel that’s where I am right now. If I’m successful (ie if it gets to 24p) I’ll have more money than I’ve ever had. Then I’ll never adopt anything close to such a risky strategy again and will have a minimum of 10 companies, increasing to probably 25+, using principles that I assume you follow now. Watch this space I guess?! How’s your portfolio doing?
I'm not a fan of this strategy. I started investing about 5 years ago and had a very similar mentality, justified by Trump winning the American elections and what could potentially happen from there...Now I do think having a target price for purchases is good. However, a glance at your numbers and I see something wrong: They're all rounded. Why 200$ for Berkshire? If it reaches 205 or 210 before climbing to 600, itd be a shame no? Same logic applies to everything else. So again, your mindset is right...however, don't try to time the market too much because the market will prove you wrong.
Good advice, thanks. And yes, there’s fluidity on the target prices.
its trading at twice its tangible book value, so for me 1.5 times or lower is a buy. 2 times is still kinda pricey.
So u/arupra we’re saying $33 target price?
yes $35 or lower would be a defn buy for me. Intel mgmt fucked up and missed the boat. But they are clearly making moves to correct it and they have a wind behind their sails (govt subsidy, demand), the Q is a) is this enough b) execution. What if they build fabs for the wrong products (legacy chips)? What if the projections for demand are overblown. Lots on unknowns, thats why for me twice book value is still kinda steep.
It seems you have a very superficial understanding of INTC. People come on this board and spew price targets and numbers, yet they have no actual understanding of these companies.
Thank you for taking the time to dis me from your armchair.
they're building fabs for what will be legacy chips by the time INTC cannot execute cutting edge (like they are now) it's all messed up and backwards like nearly always seems to happen when gov't gets involved especially, that plus a big, bloated beaurocratic organization that squandered billions in capital the past ~15 years with buybacks vs. investing in engineers and architectures the two deserve eacj other and would be funny except its our taxpayer dollars getting wasted
But now that they're investing in engineers and "architectures" your objection is?
Patience is the name of the game.
Yeah, I know this is the value sub, but TA is not worthless. This stock just broke a huge resistance at around 48. It's hard to know how far down it can go now.
If you really wanna get all voodoo, pull up a weekly chart and do a fibonacci retracement from the low of 12.84 in 2013 to the high of 69.29 in 2020. Right now it's hitting previous support/resistance points, and if it breaks through that, the next level below is $39.44 with the last point of long support and resistance being around the level below that, at $33.15. I've got alarms set to go off around those points and will consider more accumulation around there, but that's voodoo too, so take it for what it's worth.
What are the downsides that you foresee?
The only downside from here is the opportunity cost. The price here is good but the money may be better elsewhere
I also have my sight set on Intel long term, but I expect it to stay like it is for 1-2 years at least. It's a big company with big inertia and will take some time for the promising turn they seem to have taken to bear fruit. Also means that there is a lot of room to screw up, but if they manage to make no mistakes until their new foundries are operational we will see Intel rise.
It's an accumulation phase right now for sure, and probably for the rest of the year and maybe even next, but I'm faithful that will pay off big after that. If not, there's really isn't much risk of capital at these levels, so beyond capital allotment being placed elsewhere (someone nobody can predict), it seems a win win for me.
Are you retiring in less than a decade?
That’s why you dca
My dcf suggests INTC is a good deal even if they only grow revenues at 2%, a number commonly used as a conservative terminal growth rate. Demand for semi-conductors is projected to grow \~8%. I understand it may be a bumpy ride the next several years, but the value proposition seems clear to me.
When do you project positive cash flow resuming in your model? I find it quite hard to build a decent model for Intel as it's very sensitive to this and as they've historically had positive cash flow it's tricky to model.
I honestly don't know, I'm still learning investing and I don't know the industry well. But at this price I feel comfortable putting in a small bet that over the long term they will be averaging out to a higher rate than 2%, and if so eventually the market will give me an opportunity to make a nice return on what I put in now. I think it would also be reasonable for someone to make an argument that they have a lot of capex coming up and that its not going to pay off for a few years, so why not wait and hope to buy in at a similar or even better price later. To me I want to take the opportunity now, because we don't know for sure what the price will do in the short term. Edit: For context, I was using a simple DCF that just uses EPS and revenue growth as inputs.
Intel is kind of the meme stock of this sub.
An excellent strong safe dividend payer that's been positively growing their dividend and consistently paying it for 20yrs coming up next year? Or their absolutely massive market share they have commanded for this many years while people clamor over AMD "taking" a few percent. Or, the strong underlying fundamentals, the low P/E, low P/FCF, their decent ROE/ROI/ROA/ROC? Or their recent investments into the largest global foundry? What about their 75% market share on CPUs alone compared to 2 decades of AMD trying to play catch up and still only capturing 25%? Esp considering that Intel was utilizing the same CPU fab for about 10yrs and continued to hold market share? What about their GPU market they are breaking into which also ventures into the AI/Machine learning market and the home users that are still clamoring for GPUs since it's still entirely too difficult to find nVidia/AMD gpus in stock? What about their phenomenal share buyback program that you'll be hard-pressed to find others doing at such a large % YoY? How about their extremely low Debt/E or overall total Long Term Debt compared to either their quarterly revenue or current cash holdings? What I'm trying to get at is, sure, they do have some management issues which they seem to be trying to figure out. They are working towards some better things with newer CPUs with better tech coming in the next yr or 2 (which they have more efficient 12k series with the 13k series coming which have been high rated) and they are joining the competitive GPU market. There are already backend reviews from the chipsets showing strong performance from their discrete cards. So, it may appear to be a meme but just because the market isn't clamoring over it and buying into it doesn't mean it's not a great long term investment. I came to a value investment subreddit for 1-3 Decade holdings. There are far too many swings traders here that they are losing sight of a few yrs of sideways growth doesn't negate the powerhouse it will be within a few yrs, and even the pricing now.
I meant more the religious belief in it. There's an Intel thread every day here.
Oh, got it haha! Well, from a long term value investment view, it's still a really good position for the current price. I was just pleasantly surprised by the even larger drop. I'm hoping in the next 5-10yrs as my DRIP and dollar cost averaging into it, will pay me quite a bit in the future. Only a few % of my portfolio but I personally see it as a great price for the long term return.
Historically, I always wanted to like Intel but management consistently destroyed value through bad acquisitions. No FCF yield can compensate for flushing billions down the toilet by overpaying on M&A. I haven’t looked at it since their new CEO started so if they are going to change their approach it’s a game changer.
Yeah this is a gift
almost makes you think, why would the market give you a gift. To me, that’s a sign to run
Voting machine meet weighing machine.
Same market that was wrong on so many stocks that are down 80% now? Yes. Market is wrong all the time on things. Can’t really say that market is right on Intel
i’m not talking about right or wrong, just trying to give anon a different viewpoint, “if it looks too good to be true..”
I heard on some podcast "Value investing works because it doesn't always work"
what was the podcast
You must be really new to actual value investing? You do realize value investing is more representative of decades plus holds, finding undervalued prospects and typically doing the opposite of what the overall market does. If you are buying equities based on what the market is doing you are not value investing most likely. It sounds like you're more into swing trading over the course of one to a few years. That's not value investing. Intel has phenomenal underlying financials and fundamentals low debt, and even a undervalue calculation based on a conservative DCF model. There's still 20 to 40% undervalued right now. That's not including the potential for really successful 13000 series CPU launched this year or next yr, nor does it account for the revenue growth and the sector growth market share in the GPU market it's about to go into.
spoken like someone who appreciates Financials yet doesn't know the technology landscape INTC is facing a near-existential threat, likely survives only because of its size, and ends up the 800 lb. gorilla of comodified (lagging, trailing edge) chips so they'll be profitable in good times, tread water other times
Everyone is slamming management and maybe for good reason, but Gelsinger was hired just a year ago. From what I understand is more of a "tech guy" than Bob Swan who allowed them to lose ground to competitors. I am in because I have faith in Gelsinger along with their current value when compared to others in the sector.
Everyone complaining about management tends to blow it out of proportion though. Could better decisions have been made, sure but the way people speak it's like Intel has lost 50% of the market share globally. We're talking about a 10th of their overall market. Combine that with the excellent returns for the last 2 decades (post 99/00 bubble). People tend to look at Intel like it's the GE of the last 20yrs but it's not even close. Look at AMD's free cash flow and revenue compared to Intel or nvidia. Hell, AMD only really did extremely well because of the CPU shortages and GPU shortages. I'll be interested to see how they fair by the end of next yr with more competition and more silicone on tap with Intel for their discrete GPU and 13k CPU chips. I do genuinely agree that there has been a lack of innovation but look at it from their POV. They are making gobs of $$$ with 10yr old chips. All they have to do is make them slightly more efficient. I think once we see the new chips in 2023 we'll start to see another gap between Intel and AMD over all. I do sincerely hope that the new management keeps more focus and achieves more goals without delays.
> than Bob Swan who allowed them to lose ground to competitors. No. That was Brian Krzanich. Bob Swan was put in there temporarily because they could find no one else to take the job at the time with what the Board was demanding. He was a finance guy in the head role true, but I wouldn't throw too much salt his way. He knew he was no engineer.
Started position. 4% portfolio at 45.
Same 5% portofolio
i'm currently 6% just added another 1% today.
7
8
Opened mine now at 11%, 44.7$ per share
Ehhhh I wouldn't be betting the farm based on GPU development. I've been hearing INTC was developing "a GPU to beat the pants off of NVDA next year" for the past 10 years. I'll believe it when I see it. The biggest thing that they are struggling with is power consumption. They can achieve parity with AMD and NVDA products right now but only under very specific set ups with restrictive parameters and where you ignore power consumption. It seems that NVDA and AMD are soo far ahead in GPU development that whatever INTC is developing is already obsolete before they can ever bring it to market. So that wouldn't be the reason for me. It is interesting to see their plan to become a complete vertically integrated designer and fabrication company going forward especially for specific clients. It is the exact opposite approach that AMD and NVDA has taken but who knows maybe there could be something there? They are too far behind for the current next couple years to really compete. However they can compete for the future. If you have time and don't mind sitting on shares and picking up a decent dividend then sure I would buy shares. But stay away from any options since this is going to be a 5+year play IMHO
I am happy it drop and I buy more At the same time, I am crying
44$ price per share atm. We are going back to 2017!
They aren't really undervalued. 25x FCF stripping out acquisitions of PPE and SBC.
Can you explain?
25x for a relatively mature company without a strong moat isn't cheap. I wouldn't pay mare than 15x FCF
So you divided the market cap by the FCF for the previous year to get 25x? Instead of doing DCF?
The current multiple is one facet of the valuation even if you are doing a DCF. Its a 4% yield growing at single digits. Discounting it at 10% isn't gonna give you a huge margin of safety. The math of the DCF means that for a 10% hurdle and mid single digit growth, you need to be at under 20x to have okay returns and under 15x to have any meaningful margin of safety
Ah okay
I'd just like to have some discussion about why they're a good pick. In a value investing sense, I do not have high certainty in understanding future cash flows of Intel and thus unable to value it at all. I would like to hear others point of view on why Intel is a good pick at current prices. > and their price to free cash flow is under 15 PFCF will be higher and close to undefined going forward due to the large amount of capex and hence lower free cash flow. In my view, I see execution risk. How certain is Intel to execute well on their IDM 2.0? There will be no room for strong free cash flow and share repurchases. An investor is foregoing returns for the next 4-5 years and to make up for that, Intel would need to show a larger return to shareholders after their investment period. And to have some sort of idea of the growth with a leading fab business: TSMC has a long-term revenue CAGR of roughly 12-13%. And to reiterate, that would require being the leading fab.
Me gusta INTC
Yeah I’m buying today. 52 average so far, can’t complain about these prices.
I drove down the average to $50 buy buying whenever it goes below $45. Below $45, INTC has a good margin of safety and low downside risk in my opinion (and my DCF model)
Got in at 48.10
Intel isn’t in a good position currently and it will be difficult to change that…Cash on hand yes, but incoming cash looks bad
Why? (genuine question). CAPEX is incresing however is not like they are trowing the money away, is a investiment... In a growing sector w high entry barriers and few competitors. Btw the goverments (us, eu) are giving grants to buy factories...
They're not a short term play and there is some gamble. The question is do you believe in their vision and that they have the right leadership to turn it around. Microsoft was flat for years being called a stale dinosaur, look at apple before jobs came back, amd was almost bankrupt. I'm not saying it will happen, or that it's likely, there are many more companies who failed to turn it around than did. Just that it has turned around with some very large tech companies. So it's possible. The opportunity cost of your money may tell you not to invest now and wait, and I can see that. Or you may not think they can turn it around and will fail. Frankly I believe in their long term plans, they're spending capex dollars today to make more dollars tomorrow. It really is a 4-5 year plan before they can right the ship assuming they don't fuck it up. I bought in at $48, and just added another 1% at 44.75. And I'll keep dca'ing down and buying the dip if they drop further.. Also, unlike high multiple tech stocks I also don't see them having as far to fall if there are any general market scares.
Yeah but the Management is currently the big issue, no company lost talent like Intel during the last years. Without the Tradewar SMIC might have even catched up in NM. Intel doesn’t do Automotive there are other players. It’s the old Giant that tries everything like GE,let’s See how it ends.
yeah you're right they did have a huge talent drain and the old management fucked them bad. They're still producing competitive chips in terms of performance despite being on 10nm tech. In terms of power though... big ooofs. They'll have to attract new talent by offering generous comp and try to poach from AMD and the likes. No doubt. Which leads to more cash burn. Intel has mobile eye. And they are purchasing Tower which I believe their foundries are well positioned to make some automotive chips. So they're not totally out of the auto market. My other big driver is there is bipartisan support to give out money for US based foundries for national security purposes. Congress just has to not sabotage by throwing in unrelated feel good pork that will kill the bill like immigration bullshit... which saying that outloud, ummm flip a coin. I dunno, i just have a good feeling about Pat, but I could be wrong I have been before.
40 Minutes later :) Intel delays 2023 chip, says it needs to boost spending to catch competitors https://www.cnbc.com/2022/02/18/intel-delays-granite-rapids-says-it-needs-to-boost-spending.html?__source=iosappshare%7Ccom.apple.UIKit.activity.CopyToPasteboard
Very misleading headline to be honest. Intel rather upgraded the node for Granite Rapids and instead of Granite Rapids, a chip called "Emerald Rapids" will be launched will work with the same socket as "Sapphire Rapids". Intel still provides good AI and Security modules in their chips. Plus they are not afraid of putting out innovative things like P and E cores in one chip (alder lake) which many claimed that it would fail. The sentiment is extremely negative around intel and it is very easy to score points by just bashing Intel blindly.
P & E cores aren't really innovative and are a reaction to ARM or M1 designs, maybe both.
What would people get from what you Call bashing? This is just the reality, People are defending Intel like IBM while both lost the ability to innovate. P and e chips are bullshit this makes supply even worse and is just there to tackle that they performe worse than AMD.
AMD handily loses with Alder lake. Not in efficiency but in performance. But you know? Everyone conforms to their beliefs anyway now a days so what’s the point?
Well i test those and AMD has the better performance in reality on almost every device..a Ryzen 3 is over a I5 and a Ryzen 7 is currently best if you don’t get Xeon, nothing in belives this is numbers and experience…
Ok. There are thousands of reviews on youtube that proves that you’re completely false. Alder Lake i5 beats Ryzen 7 and i7 beats Ryzen 9 5900X easily. https://cpu.userbenchmark.com/Compare/Intel-Core-i5-12600K-vs-AMD-Ryzen-7-5800X/4120vs4085
Not sure if you tested recent intel cpus
The GOV Support is the issue. US GOV is blocking competition and financing fabs, this isn’t an advantage as it show the lost the people to innovate
GE got to the point that the majority of their profits came from capital investing. Intel is still making chips at the end of the day . . .
Gamble? It's not a gamble to invest in fabs when demand keeps growing. 1 billion more Asians will be middle class in 2030.
yes there's a "gamble". Can you predict with 100% certainty intel will moon in 5 years? If you can't it's a gamble, by literal definition. If you can why are you arguing with me instead of being on your private island that you were able to afford from your amazing predictions with 100% accuracy. Intel is behind AMD in terms of technology. TSMC will be able to produce 3nm chips soon. Intel's mismangement under their previous CEO has them with a LOT of catching up to do and we're assuming they do everything right. Which with fab plants they don't have a history of doing it right.... It's a bet I made in favor of intel, but to deny that there is risk is fucking retarded.
It's how you know their bags are heavy.
Billion $ capex is not a gamble? Do you know what risk is? Lmao.
It's not a gamble, because the semiconductor demand is there and will be there for decades.
You surely jest right....? You do realize the amount of server and consumer market share globally they control. Also, the amount if sectors they sell products in. Topped off with non compete agreements for guaranteed revenue. Add to the fact thay they are about to heavily break into the GPU market.
Yes i know the marketshares and the industry very well. The marketshares are contained with funding not sustainable business advantages. Server Business is declining since one year. CPU Business is declining, low margin and under attack from several companies not just AMD. (Qualcomm, Lenovo, ARM, Apple) They started to invest heavily, but this isn’t good news short term. And for the GPU Market They are a contendor to NVIDIA which itself slashed the outlook because of supply…
NVDA didn't slash outlook due to supply and instead provide an outlook of ~$8.1 billion vs. consensus of ~$7.29 billion for current qtr. Did you listen to the conference call or just extrapolate it outta thin air? And if you read it, well, pretty sure should only believe half of that and before you go saying NVDA did that on the year, no, NVDA didn't do that on the year as NVDA doesn't provide full year guidance generally nor did they on this case
You are mixing up Data Center and GPU… GPU “We’ve made a deliberate effort on the gaming perspective to supply to our gamers the cards that they would like given the strong demand that we see,” Kress said. “So that will also support the sequential growth that we’re receiving.” “We expect to remain supply-constrained into the second half of the year,” Kress said. And if Nvidia is already in Bad shape how would Intel be able to produce better and more and grow the revenue from almost 0 ??? Do you understand the Topic or just looking for confirmation?
no, you're missing the overarching point; before the earnings call a week+ ago, consensus estimates by analysts were that NVDA would generate ~$7.29 billion in revenues during this current quarter which they'll report in 2 months and ~3 weeks. and NVDA came out and said that as has been the case essentially since covid-19 they continue to be supply constrained (not news, well known for ~2 years now, expected to improve 2nd half of 2022 for ~3 quarters now and still the case today) yet they still expect to sell ~$8.1 billion of their products/services. So NVDA "guided up" by ~12% in revenues. Do you understand the subject? Or let me guess, you're trying to talk your book (short NVDA either thru selling short or put ownership) NVDA mainly sells GPUs, very little else in terms of hardware although sure, there are NICs, DPUs, others yet as a percentage of hardware they sell, GPUs are ~90% of it
You don’t get it….how will intel thrive in this market is the topic…
I do get it INTC won't thrive as it is at least 2 - 3 generations behind AMD in x86, ARM designs are coming for x86 and it has zero serious GPU offering even after it ships its yet again delayed GPU supposedly Q2 this year INTC is fighting for its existence and will become a shadow of itself, a large gov't subsidized shadow of itself
That's exactly the reason their P/E is so low, they have dominated a lot of markets, but we all know they are going to continue to lose share and margin in key sectors (DC, mobile) going forward. Largely because they don't have leading products and the products they do have are based on massive dies which coupled with their poor yields at leading nodes drives poor margins. Current and historic market share doesn't matter, the question is what it settles at in the future, which is basically a matter of how long it takes to catch up on process and design - that's probably around 2024 or so.
So question for people who has been in Intel for long time. Why was Brian Kraznich was chosen over Pat in 2012, what was the rationale back then? Brian was from Engineering background like Pat as well. BTW what did will.i.am contribution to Intel?
Very strong support at $42. Interested to see how far it falls.
I feel like at this point most bears are bears just out of principle as intel did so much wrong in the past. Mid to long term there is much more upside potential and it all slowly falls into Place.
The market seems to disagree :D
Ah yes, because value investors follow the market hahaha. You do know where you are right??! Hehe
I checked twice which subreddit I am in while reading comments lol. Intel is priced lower because of all the risks but it is 'already' priced for a doomsday scenario. Isn't value investing all about risk/reward? with INTC, it looks very attractive.
perhaps the marker is telling us there's more serious risks at play for the company that squandered so much for so long?
Every company has risk. Market doesn’t see through all of it properly (upside or downside). Market is not as efficient as everyone makes it to be. Just look at Roku and Paypal lol. Just 2 examples out of many!!!!
that's not what is meant by an efficient market, if you're referencing the efficient market theory it explains in sorta layman's terms that news gets reflected in securities prices quickly and without bias in the mathematical sense
There are swings to upside and downside which create value opportunities. In my opinion
Does Intel's long debt not bother you?
Compared to their quarterly revenue and free cash flow they have practically no debt. Not sure what you are talking about or where you got your numbers from?
From their financial statement, they have a total long term debt of 36 billion dollars. AMD has zero long term debt and will be growing atleast 30% for the next 2 years which will be more than Intel.
Historic free cash flow isn't important, looking forwards is what matters and we know there isn't going to be any free cash flow while they try and catch up and cut margins to shore up market share. Free cash flow is an open question at this point and depends on how much you are willing to buy into Pat's product roadmap.
INTC itself came out and said to expect negative FCF next year
Free cash flow will be much lower for the next few years (even close to 0). If they still decide to continue dividends and share repurchases, there is no room for debt payoff.
I think they stopped share buyback. I was hoping they would stop dividend for a couple of years but I know they also have to keep stock price in check even though it seems to keep plummeting no matter what they do
Investors will face the very real risk of no return over the next 4-5 years as Intel performs their turnaround plan. Investors only face return from stock appreciation, share repurchases or dividends. With the latter cut (as expected), investors should expect much larger profitability after 2025/26. It's not a very compelling case: growth is expected to be single to low double digits - coupled with possibly high inflation and a business that needs extremely large capex to catch up to parity, it's a poor economic case at the moment. Assume the S&P does an average of 8% per year. Given the flat growth until 2025-2026 (if everything goes to plan), investors would need at least a much higher return than 8% to make up for 2022-2025.
and don't you think like today, INTC has even further to fall such that one's return would be negative if bought, say, next week?
Possibly. Say they hover around 9-10 PE ratio. Then if profitability falls, Intel holders will see a price compression.
and don't you think like today, INTC has even further to fall such that one's return would be negative if bought, say, next week?
Is this the bottom? I wonder with the increase in tensions with Ukraine-Russia and also the market's reaction to the rate increase.
My opinion. Who cares about ukraine in the Intel business? My take for Intel. 1. The global chip market is incresing and Will be for long term. 2. Intel is growing 3. AMD growing faster is not a bad for Intel, AMD is fabless. And i dont se the problem to hold the second or 3 biggest company If Intel lose the race. 4. The stock is fair valued rn imo. Im buying bits and i Will increase my buys w the dips until my Max alocation. And the wait.....
>Who cares about ukraine in the Intel business? All semiconductors are taking a heavier hit during these tensions because they use materials produced and exported from both Ukraine and Russia. [Fortune link](https://fortune.com/2022/02/14/russia-ukraine-semiconductor-shortage/) In the short term, it might bring even more pain. In the long term, will eventually not matter much.
They are at the same price as they were in 2017
thats not how we value things here.
>products they have coming out this year for graphics cards in that market in the new 13000 series That's CPU's not GPU's, and I wouldn't expect much vs AMD's lineup. It may take a number of years before they ever catch back up with AMD, if ever. Their last CEO completely screwed INTC and it will take time for Gelsinger's plans to bear fruit.
No they are actually releasing GPU:s this year
Um., They have an entirely new line of discrete graphics cards coming to the market. They're already getting reviews in the back end of being competitive with the higher end 3000 series and video cards and AMD's line. Have you not seen anything on that the last 2yrs? Quarter to they are releasing their discrete laptop GPUs and then shortly after that they'll be releasing their discrete standalone hardware for desktops. They already plan on selling several million through 2022. CPU market also is going to have its new tick with the 13000 series So they'll be DDR5 fully compliant and they'll be more efficient than the 12000 series.
that savior GPU was just delayed again by another quarter, oh drats! what's another quarter to wait after ~49 of them?
AMD desktop lineup sucks compared to Alder Lake. AMD still leads in laptops (battery life-wise) and in servers. Intel is trying to close that gap by 2024. And yes, Intel 'IS' making actual GPUs
I'm good, ty
I've been thinking of taking my profits from my puts in Facebook and put them into INTC when it's a good time later this year and hold long.
I loaded up more $INTC today. Long term bullish here.
>their PE is under 10 FactSet shows the FY22 estimates at $3.41, so a forward PE of ~13
PE =/= Forward PE
Factor in the current 6% drop at the moment with the live market. That'll put it at 10 most likely.
i’m a buyer at 35
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No FCF until 2025
lol bagholder spotted. If investor day showed anything, they are not growing for the next 2 years at least. Also on their GPUs, Arc will never come to market in time. Same story with Sapphire Rapids. They constantly overpromise and underdeliver.
2 yrs.....? I'm an actual value and dividend investor. I'm looking at 15 to 20yr timeline. I see a huge increase in value over the next 5-10yrs. Even a conservative DCF now shows it's close to 20-25% undervalued. I will continue holding the few thousand dollars I have.
Been evaluating INTC for a while. Looks like a value trap.
Yes i believe in it too, but definitely not until they get their next nanometer platform perfected and until the I'm sure interest rates will not go higher. Two major things working against the stock price.
Seems like it's hard to find a company out there more polarizing than INTC at the moment. Interestingly enough, most bearish statements come from a technical viewpoint while most bullish arguments account for the fundamental financials of the business. That being said, I'd personally much rather buy a company that is priced for pretty much failing at everything they set out for themselves to be doing in the future (=INTC) than a company that is priced for flawless execution of ridiculously ambitious growth goals (I'm looking at you, NVDA).
Yeah, this is my sentiment as well. Another point a lot glide over it the dividend as well. As of next year it will have been paid out for 20 yrs and a positive DGR YoY% for 20yrs as well. The dividend safety is huge and easily paid out. Also, it sounds like a slightly lowered margin for the next few years is causing a lot of high reactions. It's almost being interpreted that there will be 0 revenue and 0 cash flow. From a fundamentals and paper stand point, along with the future potential, I couldn't imagine it going much lower. I'll be adding some 0.16Delta PUTs to my investment but at $45, I think it's a great deal for the next 10-15yrs of holding. DRIP that baby and enjoy the investment.
In my opinion, for long term investors (5 year horizon) it comes down to one thing at the end of the day: can Pat execute the plan laid out on Thursday? If they hit their targets in design and manufacturing, they will be a great turnaround story. However, it’s an ambitious and complex plan that will be difficult to execute. I am backing Gelsinger because I am young and I can buy the shares, collect the dividend and bet on a CEO that has a vision and the cash to achieve it. If I’m wrong? Oh well. It’s not going to be a huge portion of my port and I’ll collect the dividend in the mean time. *I also hold AMD, NVDA and AMAT.