Trump’s Return Could Make Intel (INTC) Great Again
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Donald Trump’s return to the White House couldn’t come at a more critical time for Intel (INTC). With $3 billion in fresh CHIPS Act funding and massive manufacturing investments in Ohio and Arizona, Intel is betting big on American semiconductor manufacturing. Yet our TrackStar data shows financial pros are deeply divided about Intel’s prospects. While search volume spiked 40% following the company’s recent earnings report, much of this interest centered on Intel’s massive $18.5 billion in impairment and restructuring charges. The question now isn’t just whether Intel can execute its turnaround – it’s whether a renewed “America First” policy under Trump could help accelerate the company’s ambitious plans to reclaim semiconductor manufacturing leadership. Intel’s Business Born in Silicon Valley but building America’s semiconductor future in the heartland, Intel remains the largest U.S.-based manufacturer of advanced computer chips. The company designs and manufactures processors and related components, serving markets from personal computers to data centers. But unlike competitors who outsource manufacturing, Intel is doubling down on U.S.-based production with a $20 billion chip factory in Ohio and expanded facilities in Arizona. |
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Intel segments its business into the following areas:
The company’s latest quarter revealed the depth of its challenges, with revenue falling 6% year-over-year to $13.3 billion amidst continued market share losses to AMD. However, CEO Pat Gelsinger’s turnaround strategy is gaining traction. Intel has accelerated its manufacturing roadmap, launching five new process nodes in four years. The company also secured a major manufacturing partnership with Amazon Web Services for both custom Xeon processors and AI chips. Most significantly, Intel is establishing its foundry business as an independent subsidiary, positioning it to better compete with TSMC while potentially accessing new funding sources – a move that could prove prescient under a renewed Trump administration focused on domestic manufacturing. Financials
Source: Stock Analysis Intel’s third quarter revealed the depth of its current challenges. Revenue fell to $13.3 billion, down 6% year-over-year, while the company recorded a substantial GAAP net loss of $16.6 billion due to significant one-time charges. The quarter was heavily impacted by $18.5 billion in charges, including $3.1 billion related to Intel 7 manufacturing assets, $2.8 billion in restructuring costs, and a $9.9 billion tax valuation allowance. Excluding these charges, non-GAAP EPS was still negative at $(0.46). Operating cash flow remains solid at $4.1 billion, though down from $5.8 billion in the prior year quarter. The company maintains a strong balance sheet with $24.1 billion in cash and investments, providing flexibility to fund its manufacturing expansion plans. Intel’s gross margin declined significantly to 18% on a non-GAAP basis, reflecting both competitive pressures and manufacturing inefficiencies. However, the company’s aggressive $10 billion cost reduction plan, including a 15% workforce reduction, should help improve profitability in coming quarters. Perhaps most encouraging, Intel Foundry is showing early signs of success with several new customer wins, including a multi-billion dollar commitment from Amazon Web Services for both Intel 3 and Intel 18A process nodes Valuation
Source: Seeking Alpha Intel trades at a significant discount to peers across most metrics. Its EV/Sales ratio of 2.7x is dramatically lower than Nvidia’s 37.3x and AMD’s 9.8x. The company’s EV/EBITDA ratio of 13.8x also trails Nvidia (58.8x) and AMD at 53.1x. While some discount is warranted given Intel’s lower margins and growth rates, the current valuation suggests the market is pricing in continued execution challenges. Growth
Source: Seeking Alpha Intel’s growth metrics paint a concerning picture. Three-year revenue CAGR of -11.6% contrasts sharply with Nvidia’s 63.8% and AMD’s 17.9%. Looking forward, analysts project -3.9% revenue growth versus Nvidia’s expected 87.9% expansion. However, these estimates may prove conservative if Intel can successfully leverage its manufacturing investments and potential tailwinds from renewed domestic manufacturing focus. Profitability
Source: Seeking Alpha Intel’s profitability metrics reflect its current challenges. Return on equity of -15.6% and return on assets of -0.2% lag significantly behind peers like Nvidia (ROE 123.8%, ROA 73.6%). However, Intel’s aggressive cost reduction plan targeting $10 billion in savings by 2025, combined with potential benefits from domestic manufacturing incentives, could drive meaningful margin improvement. Our Opinion 7/10 We rate Intel a 7/10 despite its current challenges. The company’s discounted valuation relative to peers provides a meaningful margin of safety as management executes its turnaround strategy. Intel’s manufacturing investments in Ohio and Arizona, combined with its recent $3 billion CHIPS Act award, position it to benefit from renewed focus on domestic semiconductor production under a Trump administration. While the path forward isn’t without risk, CEO Pat Gelsinger has made impressive progress on both the company’s manufacturing roadmap and foundry strategy. The establishment of Intel Foundry as an independent subsidiary creates optionality for additional funding while improving transparency. With the stock trading at historically low multiples and sentiment deeply negative, we believe the risk-reward balance favors patient investors willing to look past near-term headwinds toward Intel’s potential emergence as the backbone of American semiconductor manufacturing. |
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