Intel Stock Analysis: I Just BOUGHT Intel Stock at Decade-Lows! Foundry Plans Advancing! INTC Stock

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Following the latest earnings report, here is an updated Intel stock analysis (Nasdaq: INTC)!

After a brief recovery, Intel (Nasdaq: INTC) stock is now back on its way to some of the lowest levels in the past decade. Right now, they are exactly in the position that the market really doesn’t like. They are investing a lot, not focusing on the dividend, high competition and overall very little predictability. But, when this investment cycle is over, they have the potential of becoming a very very solid cash flow generator, so let’s have another look and see how they have developed recently.

Intel reported improving numbers in Q1 and expect a bit smaller ones in Q2, but overall they are advancing with the Foundry plan. Intel's net income was negative, with a significant amount of the revenue going into R&D.

And look, Intel is seriously investing. We see constant $5, $6, $7 billion in additions to property, plant and equipment PER QUARTER, which is above what other companies do in a year.

Before the investment cycle, Intel could make even more than $20 billion per year, depending on the market. For a market cap of around $135 billion, that would be a ratio of below 7 and it seems to get even lower. Now, the big uncertainty is what this investment cycle will lead to. Will they make $40 billion, or 10 at the end? Since the market is developing, we can’t know if the margin will keep being in the high 20s or in the low 10s in half a decade from now.

Anyway, let’s see if they can survive for that long.

They have current assets of $42.6 billion, which cover the current liabilities and a good chunk of the debt. Even without the goodwill, the total assets cover the total liabilities by a very good amount, so they are very healthy from this point of view, even if they increase the debt since the interest isn’t an issue anyway.

At this point, semiconductors are pretty much a commodity, meaning that there might be a lot of volatility in the future. It doesn’t have to be a negative, but I don’t think this is going to be that stable dividend cash cow anymore.

They might still pay a nice dividend in the future, but I don’t think we are going to see that before a majority of the investment cycle is over.

I think they are doing probably the best thing they could. Competing with NVidia’s technology for example would be very difficult when Intel is behind - even if they are still the market leader thanks to integrated. Instead, by going into another level of the supply chain, they could benefit from NVidia’s growth. But, this is very expensive, and it could be dragged until 2030 or even more.

Intel would then compete with Samsung or TSM, but they have the advantage of the locations. INTC would get even more political leverage because after the pandemic, governments saw how important it is to have a local supply chain of semiconductors and so on. And this is already a very influential company.

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DISCLAIMER: I am not a financial advisor and nothing on this channel should qualify as investing advice. All information is provided for your education or entertainment. It is not intended to be investment advice. This information is general in nature and has not taken into account your personal financial position or objectives. Seek a duly licensed professional for investment advice.

0:00 Intel (INTC) Stock Review
0:30 Intel (INTC) Financial Analysis, Earnings Review, Risk-Reward, Nvidia, TSMC, etc.
5:28 Intel (INTC) Stock Valuation, Price Target and Conclusions

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