Has Intel Finally Found its Footing?

[View in browser]( [The Spill Logo] BROUGHT TO YOU BY: [Logo]( Proprietary Data Insights Financial Pros’ Top Internet Content Stock Searches in the Last Month Rank Name Searches #1 Nvidia Corp 508 #2 Adv Micro Devices 172 #3 Intel Corp 123 #4 On Semiconductor 88 #5 Marvell Tech Group 65 #ad [FinPros Top Researched Stocks in Q3]( Brought to you by [Bonner Private Wines]( [This wine comes from the (literal) Edge of the Earth…]( [Bonner Private Wines - This wine comes from the (literal) Edge of the Earth…]( Join me on a journey 5,000 miles away...to an exotic, rustic land where campfires burn late into the night as cowboys doze off under the stars......where women work looms under the early dawn s first light ....where the nearest city is six-hours away across a jagged mountain landscape ...where heaven and earth seem to become one on a clear, boundless horizon where they make a remarkable red wine… [Click here to know more]( Has Intel Finally Found its Footing? Intel (INTC) once dominated the semiconductor industry. Slapping an Intel Inside sticker on a PC immediately conferred a high quality standard. 20 years later, the company now sits at the bottom of the innovation barrel, plagued by missteps that put it far behind its competitors. Now, the company is pivoting once again, entering the foundry (processor manufacturing) business , attempting to directly compete with a slew of Chinese companies and the dominant Taiwan Semiconductor (TSM). YoY revenue growth for Intel’s Foundry Services (IFS) shot up an impressive 300% last quarter - a number that caused financial pros to start researching the stock rapidly. But is that enough to turn this company around? Intel’s Business Covid exposed the global semiconductor supply chain’s fragility. America, realizing it’s dependence on China and overseas manufacturers, decided to plow billions into local foundries, bringing chip production back home. Intel committed $20 billion to build two new fabrication plants in Arizona as well as a similar amount for facilities in Ohio. While IFS isn’t yet profitable, the revenue growth is eye-popping. [IFS] [Source: Intel Q3 2023 Investor Relations]( As of right now, that’s just a small part of the overall business, but one of the fastest growing. Intel’s broader business can be broken down into the following areas: - Client Computing Group (CCG) (51% of total revenues) - Encompasses PC processors, chipsets, and hardware, catering to individual and brand needs. - Datacenter and AI Group (DCAI) (31% of total revenues) - Focuses on server processors, cloud computing, and artificial intelligence solutions. - Network and Edge Group (NEX) (8% of total revenues) - Offers products and services in network infrastructure, 5G, and edge computing. - Accelerated Computing Systems and Graphics Group (AXG) (5% of total revenues) - Specializes in graphics, gaming, and high-performance computing. - Intel Foundry Services (IFS) (3% of total revenues) - Provides chip manufacturing and foundry solutions. - Mobileye (MBLY) (2% of total revenues) - Develops autonomous driving technologies, including cameras, chips, and software. Financials [Financials] Source: Stock Analysis Investors have been concerned, and rightly so, that Intel’s fallen far behind its competitors. Although the company generates billions in cash from operations, its latest investments turned free cash flow negative. To give you an idea, operating cash flow in 2018 and 2019 was $29.4 billion and $33.1 billion, respectively. That plunged to $15.4 billion in 2022 and is $14.6 billion over the rolling 12-month period. At the same time, Capex went from $15.2 billion and $16.2 billion to $25.1 and 25.0 billion for those same timeframes as revenues plummeted. Intel’s Client Computing Group struggled to keep up with the latest innovations from Advanced Micro Devices (AMD), which continues to take market share. That forced Intel to increase long-term debt from $25.3 billion in 2019 to $35.7 billion in the latest filing. All this is to say, Intel’s making a big bet that will either pay off or obliterate shareholder value. Valuation [Valuation] Source: Seeking Alpha Intel’s profitability is non-existent. So, we’re left to judge it by price-to-cash flow and other measures. Certainly, it’s cheap, as is ON Semiconductor (ON). However, we’d argue that it may not be cheap enough given its negative free cash flow. Growth [Growth] Source: Seeking Alpha As the table above shows, Intel’s revenue growth has been abysmal, worse than any of its peers. At a time when demand for semiconductors is at an all-time high, Intel is unable to capitalize. The negative EBITDA growth over the last several years further evidences this. Profitability [Profit] Source: Seeking Alpha On top of growth problems, Intel’s margins aren’t great. However, those should improve as the new plants come online in 2025. Until then, it’s going to be a slog. [It's time you learn about Alternative Investments!]( Real Estate.. Private Equity… Commodities.. They can help you make a fortune. But it’s hard to figure out which to invest in. Ready to learn how to take your investments to the next level? [Sign up for The Alt for FREE.]( Our Opinion 5/10 Intel’s transformation is very much up in the air and many years overdue. We’d hesitate to put money into the company until we see progress towards the end state. Otherwise, it’s dumping money into a giant question mark. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= %3Cbr+%2F%3E%0A%3Cb%3ENotice%3C%2Fb%3E%3A++Undefined+property%3A+stdClass%3A%3A%24previewText+in+%3Cb%3E%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3C%2Fb%3E+on+line+%3Cb%3E102%3C%2Fb%3E%3Cbr+%2F%3E%0Ahttps%3A%2F%2Finvestingchannel.com%2F%3Fp%3D598533?utm_medium=ic-nl&utm_source=114293 ) News & Insights Just Spilled - [Does Target’s Blowout Quarter Signal a Turnaround?]( - [Simplifying the World of Investing for You]( - [Don’t Invest in Natural Gas With This ETF]( - [Why Financial Pros Keep Holding PayPal]( [News & Insights-facebook-share]( [News & Insights-twitter-share]( [News & Insights-linkedin-share]( [News & Insights-email-share](mailto:?body= %3Cbr+%2F%3E%0A%3Cb%3ENotice%3C%2Fb%3E%3A++Undefined+property%3A+stdClass%3A%3A%24previewText+in+%3Cb%3E%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3C%2Fb%3E+on+line+%3Cb%3E102%3C%2Fb%3E%3Cbr+%2F%3E%0Ahttps%3A%2F%2Finvestingchannel.com%2F%3Fp%3D598533?utm_medium=ic-nl&utm_source=114293 ) [We want to hear from you. Let us know your thoughts by clicking here]( [Ads] [InvestingChannel Logo](#) Follow us on: [Facebook Logo]( [LinkedIn Logo]( [Twitter Logo]( [Instagram Logo]( To ensure delivery of all emails, [allow us on your list](. Manage your subscriptions with our [preference center](. [Unsubscribe here.]( View our privacy policy [here](. Copyright ©2023 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc., newsletter is for information purposes only and is based on opinion. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or eliminate losses. InvestingChannel, Inc., makes no representation or implication that using any of the methodologies or systems in this newsletter will generate returns or insure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](