Intel: Double-Digit Growth Galore

Summary

• Intel had a solid (boring) quarter that has been misinterpreted in many ways.
• Most people thought Intel revenue declined, but in reality, nearly all important segments grew double digits. No one buys Intel for its PC business.
• The stock dropping on downside Q2 guidance, despite Intel reaffirming its FY guidance, tells everything about the myopic short-sightedness of Wall Street.
• Intel is expecting a strong data center through 2022. If the data center collapse (due to AMD share gains) isn’t happening this year, it will never happen.
• Buy the dip on overblown myopic concerns.

RobsonPL/iStock Editorial via Getty Images

Investment Thesis

Intel (NASDAQ:INTC) had a solid in-line quarter that didn't change anything about what anyone knew about the company - hardly surprising after February's Investor Meeting.

However, people always seem to go out of their way to find even the slightest blemish in Intel's results in order to send the stock down. What they found this time was utter nonsense in my opinion, as the stock declined on light Q2 guidance despite Intel reiterating full-year guidance. Buy the dip on overblown nitpicking.

Q1 analysis

It is amazing to see what lengths people always go to in order to find things to be upset about in Intel's earnings results. When it comes to measuring Intel, investors use a microscope that provides an even stronger magnification than what Intel uses to inspect its transistors. So as expected (see the risk paragraph in my Q1 preview), this quarter was no different. If it isn't the revenue growth, then it is the gross margin, or else it is the cloud or PC.

First and foremost, the criticism I mostly saw was that Intel revenue declined. I am not going to nitpick myself, so from my view Intel's revenue in reality was flat for all intents and purposes. The only reason people talked about a "decline" was because Intel lost $1B in NAND revenue. Intel sold this business for $10B. In addition, Intel had a further $0.7B headwind from a Q1'21 prepayment.

Intel

Looking under the hood, we can see that the culprit for the mediocre results was the PC with a decline of 13% on tough comps a year ago as the world was scrambling to buy PCs for learn and work from home. This year, the usual seasonality (after the holidays) kicked in again, combined with inventory burn. (Intel had warned investors about this last quarter.)

However, as I have repeated ever since I first started covering Intel (and also repeated in my Q1 preview), the PC will never become a real, systematic growth engine. Note that Intel delivered six consecutive record PC years in a row despite the Apple (AAPL) Mac and modem losses and AMD's (AMD) resurrection. Intel's luck has to end at some point, and it seems that will be this year.

More to the point, I would claim that I can "predict" Intel's PC revenue 20 or even 200 years from now: it will still be about $40B (inflation adjusted), give or take. Again, this isn't Intel's growth engine so no single investor is (or should be) buying Intel for its PC business.

So let's look at the other businesses. As a reminder, Intel basically told investors at the February Investor Meeting that it is building three 11-figure (>$10B) businesses from scratch (Mobileye, foundry and graphics), while also growing the data center and network/edge at double digits.

First, people have been telling us that AMD has "open season" in the data center for the next few years, yet DCAI (cloud + enterprise + FPGA + Habana) grew 22% to $6B. Although this was no surprise given the very easy comps from last year (last year was the reverse with the PC saving Intel's Q1), and revenue did decline about $0.5B from last quarter's all-time record, but overall this should be considered a solid quarter.

The bigger picture story here is that this strong growth is definitely proof that, contrary to what the AMD bulls likely were thinking when they saw the 20% DCG decline last year, Intel's data center business has not entered a structural decline caused by AMD's market share gains, even if it was just because the overall market is growing faster than Intel's share losses. In other words, Intel's talk about "cloud digestion" has again been proved correct.

More importantly, given the strength in the data center Intel is expecting through the year, this also means that if there won't be a data center collapse this year, it will never happen since AMD's window of opportunity has definitely closed with the start of the Sapphire Rapids ramp, which is a leadership product. Now, admittedly even Intel has admitted that Genoa will leapfrog Sapphire Rapids by the end of the year, so in principle this back-and-forth of leadership could imply that AMD may deserve 50% market share in the data center, which does leave a downside that could happen, but the same argument could be made about the PC and there it also hasn't happened. (Although AMD keeps claiming that it continues to gain share, in reality AMD's market share gains in the PC have become absolutely minuscule in the last year.)

As one more comment, although the ramp is in line with what Intel had announced last year, I would have preferred Intel to stick more closely to a 12-month cadence. (Ice Lake saw its official launch in April last year.)

The last point with regards to the data center is that Intel provided another update on its Ice Lake shipments. Intel has never provided such data about any of its previous ramps, so this is certainly useful information. More specifically, Intel said it has now shipped a total of nearly 4M units. I have seen some mistakes by people about this, but the previous update was that Intel sold 1M Ice lakes in Q4, which Intel said was about as much as all shipments in previous quarters. Hence, Intel shipped nearly 2Mu in Q1. In other words, Intel has been exponentially ramping Ice Lake, although this means even in Q1 Ice Lake still only had about a 25% share of Intel Xeon shipments.

Secondly, NEX (IoTG + network) was up 22%, another very solid result. Intel expects lower growth for the rest of the year.

Now we are coming to Intel's three emerging businesses. AXG (GPU and blockchain) was up 23%, which is still the calm before the storm of the many product ramps later in the year: Arc 5/7/9 series, Arctic Sound, Ponte Vecchio and the Blockscale bitcoin mining chip. Mobileye was up 5% on a tough comp, although the real story here is the upcoming robotaxi launch by the end of the year. Admittedly, competition from NVIDIA (NVDA) and QUALCOMM (QCOM) has been intensifying, but Mobileye being about to start its robotaxi business signals Mobileye's leadership technology position.

Lastly, IFS reported triple digit growth, citing Amazon (AMZN) and Cisco (CSCO) packaging as growth drivers. Intel also provided another data point by indicating that it has now 10 "qualified opportunities", representing deals worth $5B. Intel also cited tool growth from its IMS e-beam tool business (from an acquisition several years ago). IFS is currently a $1B run rate business, but obviously the target should be to 10x this revenue at least.

Overall, following is what I meant with analysts and investors nitpicking about Intel: a few quarters ago the data center was underperforming, so everyone was whining about that. People didn't believe the "digestion cycle" story, and instead blamed AMD for Intel's mediocre results. But now that DCAI grew double digits those people had to find something else. (While clearly AMD is still taking market share from Intel, as I have been arguing the data center is a strongly growing market.) The usual thing would be gross margin, but Intel had already guided for low-50s margins, and Intel beat its guidance.

So in the end investors had to give the PC business a hard time, but that is actually the one business I don't care about. In addition, as mentioned Intel's revenue would have been flat or even up slightly if not for the artificial ~$1.8B headwind from NAND and the prepayment.

In summary, all businesses besides the PC (which are the ones investors care about) were up, mostly by double digits. Hence, Intel actually had a very solid quarter. (Obviously a >$70B business isn't going to grow by 70% like AMD just reported.)

Guidance

Just minutes before the earnings report, I saw an article previewing Intel's Q1. It said that analysts expected Intel to reduce its full-year outlook by $2B.

Instead, Intel reaffirmed its guidance. While there is some macro uncertainty, inflation, the Ukraine and Russian stuff and shortages, Intel stood by its guidance. While Q2 is a little bit light, the fact that the stock declined shows everything one has to know about Wall Street shortsightedness. In reality, analysts were expecting a $2B downgrade, so if anything, I would argue that Intel beat expectations.

All-time high R&D

R&D spending reached another all-time high of nearly $4.4B. Given the rate at which the spending is increase, Intel seems on track to breach the $20B run rate ($5B quarterly) at some point over the next year or so. For example, at Investor Meeting Intel provided a figure of a $1.5B increase in technology development, which is significant increase over just one year. Intel also continued to add employees, albeit at a bit slower rate than late last year, reaching nearly 123k.

Pat Gelsinger said this will be the greatest turnaround story ever. He recognizes he can't do this alone or by appointing new management, so this is how he is going to do it.

Turnaround thoughts: 5 nodes in 3 years or 4 nodes in 2 years

Since I am an Intel bull obviously I have never supported AMD's comeback, but clearly AMD fans will have enjoyed it. Similarly, I have a few shares of Alteryx (AYX), and although I didn't time the bottom at all, it is nevertheless nice to see a company you own improve and succeed in its turnaround.

Similarly, I am now in the position where I am following Intel's resurrection. Not in terms of financials, which remain strong (at least top-line revenue), but in terms of regaining technology leadership.

For Intel, this depends on its process technology. To that end, Intel will soon be revealing a barrage of technical disclosures about its upcoming Intel 4 node, but the few details that have been revealed are in-line with what Intel had previously said about this node.

Nevertheless, long-time Intel followers may know that many years ago former CEO BK promised a 2.4x density shrink for the Intel 4 node. My assumption is that Intel 3 will deliver that final 20% with Intel 3. In any case, even with a 2x jump Intel 4, as the name suggests, will land somewhere between TSMC (TSM) N5 and N3 in terms of density.

In that regard, it is a bit surprising that Intel for the last year has been saying that it is targeting performance per watt leadership with 18A in 2025; Intel management until now still hasn't publicly discussed its target for density. However, in terms of density, 20A should already be a leadership node, well ahead of N3. Also, 18A is only targeted to be a 10% improvement for performance per watt anyway (the smallest jump of any of the 5 nodes).

As a reminder, while performance per watt is important, ultimately Intel got fundamentally into trouble for falling behind in transistor density. This for example allowed AMD to compete in the data center with 64-core CPUs against Intel's 28-core CPUs, or with 16-core CPUs against Intel's 8-cores. As another reminder, although things like leakage can cause some deviations, the general trendline (to first approximation) is that power consumption drops as transistors get smaller. Hence, performance per watt leadership and transistor density leadership should ultimately be highly correlated.

(But transistor density is the most easy metric to keep track, so that is indeed the one that investors should look at. Of note, although Intel has claimed it will achieve performance per watt leadership with 18A, investors may observe that management has not provided a quantifiable metric in order to verify or falsify this claim, whereas transistor density could be easily measured and compared, as I have done in the tweet above.)

In any case, with the 18A pull-in, this really means that Intel is doing 5 nodes in 3 years instead of the "5 nodes in 4 years" that Intel has been publicly saying: from Intel 7 in H2'21 to 18A in H2'24.

As I am writing this while AMD is reporting its own Q1 results, someone on Twitter is asking who the "tech general" is. Obviously, there is no contest. Even after all of AMD's growth, its revenue still pales in comparison to Intel. And frankly, with all the technology that Intel has in store in the next few years, it is just that much more exciting to be on the blue side.

Now, how does this translate into an investment proposition? I still expect that the stock will lag behind the technology trends. Hence, while Pat Gelsinger was saying the turnaround train is leaving the station, what he meant is that Intel onboarded over 10k net new employees (and still growing) over the last year; there is still quite some time to get on the investor turnaround train.

Summary

The key points from this discussion:

• All businesses that investors care about were up in Q1, even by double digits (except Mobileye). This means it was a solid report.
• In the wake of all the macro concerns (shortages, inflation, Russia/Ukraine), "analysts" were expecting that Intel would reduce its full-year guidance. Intel did not.
• The main reason was that cloud and networking strength is making up for weakness in the PC. With the Intel data center collapse not happening this year, it therefor will never happen with AMD's window of opportunity now being closed by Sapphire Rapids.
• Intel 4 will deliver a 2x jump in density, a bigger jump than any TSMC node in at least the last two decades. This means it will not trail TSMC N3 by much. This will be the prelude for Intel's long-awaited return to process technology competitiveness since TSMC is on a 3-year cadence to go to N2.
• In stark contrast, Intel 4 is just the first of four nodes in two years, culminating with 18A in H2'24. This means Intel will go from being a dinosaur to the cutting edge of semiconductors in just 8 earnings reports. This is the magic trick that Intel has up its sleeves.

Intel Q1 earnings notes

• Pat: beat revenue, gross margins, and earnings, $1T opportunity
• Ship initial SPR, dual-track roadmap, launch Arc A, L4 in Jerusalem for robotaxi
• Europe investments, Gordon Moore Park
• ESG: 100% renewable 2030, net-zero 2040
• Torrid pace
• Industry: long-term growth, matched sets limitations, inventory adjustments
• Lockdowns, Ukraine -> global supply chain, shortages until 2024
• Arizona, Mexico, Ohio, Europe (Silicon Junction)
• Gov support: Chips Act, EU Chips Act -> need funding
• 5 nodes in 4 years: 7 ramping, 4 MTL boot Windows/Linux, more milestones: early Sierra Forest wafers, IP test wafers 20A, 18A test shuttles (remain on/ahead schedule)
• Supply chain: mix 3Mu, Meta partnership for Xeon
• Investor Meeting: 6 businesses
• Client: win share, grow ASP -> sustainably larger PC: gaming, commercial, slower consumer, inventory, inflation, Alder Lake 15Mu, 250 design wins 2022, vPro, Raptor Lake sampling, MTL 2023
• DCAI strong growth (on weak comps), cloud and enterprise -> double digit growth, ecosystem supply constraints (Ethernet), ICL 4Mu shipped (2x from Q4), initial SPR SKUs (select customer), dual-track roadmap, Agilex record FPGA (5 of top 6 clouds), Habana Mobileye win, Gaudi2 sampling, software Granulate acquisition: dynamic optimization
• NEX: 5G SDN, record revenue, new Xeon-D, FlexRAN, openVINO +70% downloads YoY
• AXG: Alchemist shipping since early Q1, 2x perf vs. IGP, DeepLink (+30% perf), high-end "later this year", Ponte Vecchio sampling, Arctic Sound available in H2, blockchain sampling, production H2
• IFS $1B run rate for first time, 10 qualified opportunities in advanced stages across, >$5B deal value, >30 Intel 16 test chips, first tape-outs in H2, anchor customers progressing, Tower enthusiasm
• Mobileye EyeQ5+8MP launch, added Miami, Stuttgart robotaxi testing, robotaxi by EOY, IPO progress
• Intel Vision, add talent, rebuild execution machine
• Dave: solid quarter despite supply constraint, inflation, macro uncertainty
• Higher margin on lower factory start-up, higher yield
• PC ASPs up >25% on mix, inventory burn
• IFS up on higher IMS tool shipments, packaging from Cisco, Amazon
• Guidance: reaffirm 2022 guidance: PC weakness offset by cloud and NEX
• Shortages: inflation pressures PC TAM, lower inventory to continue in Q2, recovery in H2, DCAI strong H2 (ICL/SPR increase competitiveness), AXG >$1B due to all product ramps, 52% gross margin (some price increases), $27B net capex unchanged
• Gross margin increase in H2

Q&A

• Inventory (Intel vs. generic)? Build 10nm inventory (ADL, SPR, RPL) for ramp, customer inventory burn in H1
• H1 weaker, H2 stronger, guide same? Overachieve in Q1, Q2 a bit lighter. Strong growth in DCAI, NEX (long lead times), enterprise, client seasonality, stronger product line (ADL, SPR, RPL), AXG "extraordinary set of products", outlook consistent with investor day, on track
• Growth rates? PC seasonality, DCAI growth through H2, NEX grow faster than market (but lower than >20% growth in Q1)
• Intel 7/10nm yield, SPR slow growth/ramp? Intel 7 ramping "faster than expected", reiterate Intel 4/3 updates (taped out Granite Rapids compute tile "today"), ADL ahead of schedule, SPR first PRQ in Q1, "more muted ramp", ICL ramp, yield improve, but pressure in Q2 from 10nm, tailwind from Intel 7 in H2
• PC ASP growth? Mostly mix, also targeted price increases (inflation) through year, stronger products in H2
• Ramp Arc desktop, 4Mu? AXG "on track", more SKUs through year, optimize drivers Arc 5/7/9, PVC, ATS, blockchain, on track for targets (build $10B business), Deep Link advantage
• Capex, tool availability? Lumpy, overall on track, work with equipment vendors, working on '23/'24 goals, meet factory ramp cycles (Oregon, equipment in Ireland, soon in Israel, Ohio groundbreaking, German fab), some pressure (many use Intel FPGAs, support them), $1B offset, could do better
• DCAI operating margin? Little bit better than expected, margin down due to 10nm, cloud strength, enterprise more constraint (matched sets), SPR(-M) ramp, ICL higher volume, long-term roadmap (don't stretch 1 product across 2 products), "every hyperscaler, OEM has many SKUs lined-up, broadly deployed this year", long-term will be accretive to corporate average
• TSMC N3 delay impact, subsidies? Both timing and capacity, working with product teams, IDM model gives fundamental advantage (majority internal), own nodes on schedule, "unquestioned process leadership", capacity at scale
• GPU beyond consumer? Yes. Media performance (Arctic Sound)
• SPR ramp vs. ICL, new platform, cloud availability? DDR5 challenges with suppliers (debug interfaces 90 days ago, but now qualified), target to ramp faster than ICL, all OEMs/hyperscalers available in H2
• Wrap up: execution machine (nodes, products), "greatest turnaround story in history"

Investor Takeaway

Pat Gelsinger ended the call by saying that Intel is the "greatest turnaround story in history", which is along the same lines as how I have been describing Intel.

Ultimately, Intel simply delivered a solid in-line quarter and reaffirmed its full-year outlook. Nothing really changed about the business, which in this case is as it should have been since Intel just held its investor meeting a few months ago. It is almost sad to see how bears are going through all these efforts to spin these numbers. There really was nothing that warranted a 5% sell-off, except for the spreadsheet analysts who got the seasonality of Intel's annual guidance wrong.

Net of the NAND business (which was the main reason for the revenue "decline" besides the PC weakness), Intel is still expecting to ever so slightly deliver a new record year. So clearly the business is completely falling apart (irony). Given the tough PC comps, this means (and as Intel confirmed) the data center will continue to be strong through the year. Given the many worries about the data center last year, the bear case of a severe data center decline due to share losses to AMD will not happen.

But if the forecasted data center collapse doesn't happen this year, then it will never happen as Intel will be spending nearly $20B on R&D going forward. Hence, investor may buy the dip, either for a short-term trade on overblown concerns or for the long-term turnaround.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of INTC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Comments

[TheLazyInvestor]

So, author is not disappointed at all that the highly-hyped (by author himself) Alder Lake launch actually resulted in CCG drop. What a surprise.

[visualzero]

"In stark contrast, Intel 4 is just the first of four nodes in two years, culminating with 18A in H2'24. This means Intel will go from being a dinosaur to the cutting edge of semiconductors in just 8 earnings reports. This is the magic trick that Intel has up its sleeves."

The problem is and continues to be, that while AMD and NVIDIA are shipping products on the latest nodes Intel is "shipping" claims on PowerPoints. In the autumn AMD will be shipping 5nm Zen 4s and NVIDIA new GPUs on TSMCs latest 4nm (or 4N as NVIDIA likes to call it). Intel is at least a year away from shipping anything on their Intel 4. And if history has taught us anything, probably there will be delays. They had the same aggressive story on 10nm. As they say: Fool me once shame on you, fool me twice shame on me.

[2CommaClub]

It’s amazing you can write this with a straight face lol. I get you are an Intel bull but you are lying as much as Pat G. Are you sure you aren’t Pat G’a secretary??

INtel ARC will be a Chinese only release as arc mobile was a smangun Korea only release. It’s dead on arrival. ARC is never going to compete with Nvda/AMD on the GPU front.

[jayn]

@2CommaClub being the first to AV1 hardware accelerated encode is a nice feature. The relatively large matrix compute, including bfloat16 and Int4 are interesting features. The Deep Link feature is a nice bonus.

[TYB]

Double digit, is Arne living in the 90s? The whole competitive business landscape has changed and Intel is a Dinosaur! Is this like Pat’s line on AMD in the rear view mirror? Is Negative the new positive and behind is the new in front ?

semiwiki.com/...

AMD: 71% (GAAP and Non-GAAP, 55% if excluding Xilinx)

Intel: -7% (-1% non GAAP, -7% GAAP)

UMC : 34.7%
TSMC: 36%
NXP: 22.2%

Samsung Memory: 39%
Qualcomm: 41%
SK Hynix: 43%

Micron: 25%

onsemi: 31%
MediaTek: 32.1%

STMicroelectronics: 17.6%

TI: 14%

ams OSRAM: -3%
SkyWater Technology: 0%
Power Integrations Inc: 5%
Qorvo: 8.72% (GAAP, Fiscal Q4 2022 compare to Fiscal Q4 2021)
Skyworks Solutions: 14% (Fiscal Q2 2022 ending March 31, 2022)
Melexis NV: 18%
Alpha and Omega Semiconductor: 20%
ASE Group: 21%
Realtek: 27.49%
Wolfspeed: 37% (Third quarter of fiscal 2022, ended March 27, 2022.)
Silicon Laboratories: 48%
Renesas Electronics: 70.2% (Non-GAAP)
SiTime Corporation: 97.7%

[and35rew]

Well, Intel promised Sapphire Rapids in the same year as Icelake (2021). Didn t deliver. Intel promised DGPU in Q1/2022, didn t deliver.
Despite the fact, that Alderlake architecture with efficiency cores seemed like perfect fit for low powered laptops, it is struggling to match Ryzen 6xxx series where it (in laptops) matters the most (low power). www.youtube.com/...
We ll not speak about integrated graphics of 6xxx series vs. Alderlake, because this is no match at all.

But Intel is not only lacking on process technology, but clearly on 3d packaging technology as well.
While intel is just talking and making great presentations about foveros(where are the successors of lakefield?), emib, ODI.. TSMC/AMD is already delivering actual 3d stacked products for revenue (MilanX, Ryzen5800X3D). And cache is just the PoC demonstration of the technology... There are many more usecases coming in the next years...

[RyzenFan]

@and35rew That's the main difference between Intel and AMD.
Intel promises but AMD delivers.

[jayn]

@RyzenFan so, where are AMD's avx512, dlboost, ddr5, pcie5, wifi6e, thunderbolt, tiled matrix operations? Intel delivered.

[RUBYRUBY3]

@jayn
avx512 on Alder lake is dead, more trouble than it was worth.
Probably too hot.
INTC delivered it too soon as in a rush to get a headline win.
DDR5 is still too expensive.
Not everyone wants a new motherboard with the new chip.

[lou will]

Very good detailed analysis. I am long term Intel, also encouraged with the direction management is taking now. As usual time will tell.
Regards AMD, noting that the market has not been particularly kind to AMD's prospective having dropped 35 % since December 31
including a drop of 6% today. All I can say about that is ouch ! Thanks for the analysis !

[RUBYRUBY3]

@lou will
INTC $68 peak to $44 YOY is also 35%, about $100 short of AMD peak price and about $50 below AMD today.

[lou will]

@RUBYRUBY3 Well the point is that the current period is more applicable from an investment standpoint as it pertains to future successes.

[RUBYRUBY3]

@lou will
Counting chickens with a bucket of eggs.
3,6 and 12 month EMA lines show climb flutter on double top and current fall. Buying against these lines can be very expensive or at least force you to wait a very long time to break even. Wait till it crosses up over them.
Good luck with your picks
INTC 3 year

bigcharts.marketwatch.com/...

[dokah]

A good covered call stock for me so far.

[Geo67]

Are we going to be sitting here years from now and waiting for intel to deliver ?

[Dineshdhill]

@Geo67 probably yes

[PeterB_86]

Arne inadvertently gets another headline bang on. First "Intel: EUV Misinformation" - which perfectly described his content.

And now "double digit growth galore" - yes, there is indeed double digiit growth for almost every semiconductor company. Except Intel.

Comical Arne strikes again.

[RyzenFan]

Intel's client computing group is down solid double digits 13%.
Compare to AMD's growth, Intel is pathetic.

[Agency Man]

Long Intel. AMD fanboys got no idea.

[RyzenFan]

@Agency Man I'm an AMD fanboy. All I need to know is at today's price,
I'm looking at 5000% gain on my AMD shares. How's your Intel shares?

[lannorris5]

"Intel is the "greatest turnaround story in history", which is along the same lines as how I have been describing Intel."

Amen! Been saying this for months!

[PeterB_86]

@lannorris5 Wouldn't is be wiser to wait for the actual turnaround to happen before declaring victory ?

[Frank Siedler]

Two stocks which have beaten the earnings estimates ... but only one of them has a future ... that's AMD ... Intel revenue goes down ... AMD revenue goes up.

[RyzenFan]

@Frank Siedler AMD gross margin is up too.

[DAHABES]

For all the naysayers... I read an article a few years back about "The Only Twenty Companies That Matter" - TOTCTM. These are the top 20 companies (US) in terms of annual earnings. These 20 generally account for 80% of ALL earnings. In the end, it's earnings that matter. They include names you would expect - FB, GOOG, V.

And INTC. Consistently. More consistently than some of the others (like the mega banks/financials - MS, BAC - which tend to swoon every few years due financial excesses playing out during recessions. Any Aristocrats among these tickers? NOPE!).

INTC pays a solid, well covered dividend, delivers consistently on FCF generation, it has improving prospects and it isn't going away any time soon. It's not TBTF, but it's damn close. AMD is a midget in comparison...and pays no dividend. 'Nuff said. Get real, people.

[state_of_affairs]

@DAHABES GM shareholders thought the same thing about Toyota in the 1980s. And does it matter that INTC pays a dividend if the stock keeps going down?

[omdguy]

@DAHABES

If Facebook and Google are on this list, then it isn't much of a list at all. Both companies don't "produce" anything of significance and rely on data mining and ad sales for revenue.

Both could disappear tomorrow and the world wouldn't miss them...

[millzee32]

@state_of_affairs Big difference. GM sat around and watched other companies get better. INTC is making changes to get INTC better investing in R&D and new Fab business and righting the ship while still staying way ahead of the competition in Revenue/Earnings/Cash Flow.

[Art Rimbaud]

Trust me folks, there’s no bigger expert on “myopic concerns” than Arne V.

Funny how he’s guilty of exactly what he accuses others of but refuses to acknowledge how terrible his analysis of INTC and AMD has been. Anyone unlucky enough to have followed his advice knows the truth.

[zisdead]

@Art Rimbaud eh AMD crashed from 164 to 80 and change...looks like he ( and me ) called peak AMD perfectly

[Art Rimbaud]

@zisdead yeah, a broken clock is also right twice a day. He was bearish all the way from $10 to $120 and, more importantly, completely missed the sea change in the industry dynamics, blinded by his cognitive and anchoring bias.

If that’s the type of analysts you want to follow, calling 1-800-PSYCHIC for stock picks is likely to be more accurate and not as financially disastrous.

[PeterB_86]

We truly live in a golden age of cognitive dissonance (the curious effect whereby people re-interpret information directly contradicting their firmly held beliefs as supporting them as the pain of accepting the need to change is simply too high).

One does wonder exactly what set of comparative Intel/AMD results would cause Arne to reconsider ... 0% growth vs 71% growth doesn't seem to be quite enough ...

[C185]

@PeterB_86
Most people aren't going to be fooled by the "71% growth" number. Just adding in Xilinx revenues (which came with share dilution) isn't organic growth. Back out Xilinx revenues in their Q2 forecast and AMD is forecasting little Q1 to Q2 growth in their core businesses. The reality is AMD's core businesses are decelerating and adding in Xilinx doesn't change that.

AMD is down from $160 and with these so-called "blowout" earnings it's barely holding above $90. Perhaps you should take your own advice and re-evaluate your firmly held beliefs.

[chrisgar]

@PeterB_86 Clear from the article title who had written the piece.

[PeterB_86]

@C185 How do you know what my beliefs are and how firmly held they are ? I have no stake in either AMD or Intel.

[manpower]

$INTC is too focused on building FAB(s). Not enough on advancing its technology and markets. Should not have brought back current CEO. I didn’t care for his thinking when he worked for $INTC previously.

[jayn]

@manpower
yet they introduced ddr5, pcie5 in Alder Lake last October... looks like a year ahead of AMD.
IPU chips, NFV chips, Bitcoin mining chips, SPR-HBM... all happening now for Intel, while AMD not on the map.

[manpower]

@jayn These are not helping $INTC in competing with $AMD.

[linkzter]

@manpower building fabs is good if you are capacity constraint, which intc is last I checked.

[Jlexus1953]

Extensive and comprehensive analysis of the company that the market simply loves to hate. If you look at the charts Intel stock always goes down after a quarterly earnings report regardless of results.Mister market constantly looks for the negative. Intel is still a 70 + billion diversified revenue producer that generates around 20 billion in profit, and 20 billion in FCF and pays a dividend. New management that understands the business in in place for 15 months and you can see the divergence neither R&D approaching 20 billion which will ultimately turn out better products.
I own a large portion since 2011 with SP of $24 and anticipate that if Intel goes from poor performance to even average that the company will breach 100 billion and the stock will respond in kind

[oak8292]

@Jlexus1953

The market is not hating Intel. The market has a strong bias for growth and Intel's growth story has been very weak. The stock runs up prior to earnings with expectations and gives it back when the story hasn't changed. Slow growth gives an average PE.

Slow growth with underinvestment in a capital intensive business generates a negative sentiment. Intel's margins held in the 60% region by underinvesting in capital during the extended 14nm run. FCF should differentiate between capex to sustain operations versus capex for growth. In the semi industry this is extremely difficult to calculate since businesses need to run just to stand in one place. If you aren't building new fabs, like Intel then you are falling behind. Intel's FCF is going to be much less than $20 billion for a number of years because they have underinvested in node transitions.

The PC volume is what drives Intel and it is not a growth story. It has been shrinking since about 2012 when the ARM tablet took over the low end of the PC business. Growth in servers is great but is it large enough to offset the shrinking PC business and does it have adequate volume to support the R&D and capex of Moore's Law. The smartphone business was the growth industry for the last decade and Intel missed it. All of the new wafer volumes that support fabs came from smartphones.

The market for the last 10 years has rewarded growth narratives and Intel has not had a compelling growth narrative for the last decade.

[r Negoro]

@oak8292 you got it right.

[David Muncier]

@oak8292 , dead-on analysis, Oak !

[SemiWiki.com]

Intel: -1% (-1% non GAAP, -7% GAAP)

AMD: 71% (GAAP and Non-GAAP, 55% if excluding Xilinx)
TI: 14%
NXP: 22.2%
Micron: 25% (Fiscal Quarter ended March 3, 2022)
Onsemi: 31%
MediaTek: 32.1%
UMC : 34.7%
TSMC: 36%
Samsung Memory: 39%
Qualcomm: 41%
SK Hynix: 43%

[TYB]

@SemiWiki.com amazing in the biggest boom in history the biggest with its own fabs has contracted. Odd as they claim their 10nm and 7 are doing well, very strange as every other company grew revenue, income and GM, indeed very odd

[Green Mean Machine]

@TYB At the same time, they are telling everyone they have constraint till 2024 AND they need to cut ASP to compete.

7(intel 4)? it is not on MP yet. Just on the ppt. TSMC is going to pilot run their 3nm in 2H 2022.

[Lorenzo Marchetti]

"When it comes to measuring Intel, investors use a microscope that provides an even stronger magnification than what Intel uses to inspect its transistors"
ahahahaha, true!