Last Update 06 Dec 25
Stable growth
My previous narrative is one year old, and it seems I was right. Intel ceased losing money, Intel 3 server processors and its PC processors (namely Lunar Lake and Arrow Lake) are doing well, in fact Intel could sell more if it had enough capacity allocated. Graphic chips are successful and the Intel 18a is in decent shape. My prediction, that the US government and leading US tech companies (NVIDIA, Apple and maybe Tesla) would not let the only American high-end chip manufacturer down, proved also be correct.
After so much self-flattering my assessment:
· Intel’s future depends on its foundry business, especially on the intel 18a technology and the processors built on it. Intel 18a is comparable to TSMC newest 2nm and Intel has a half year advantage (first laptops using intel 18a Panther Lake processors will arrive in January, computers with TSMC 2nm chips in the second half of the year).
· If 18a is a success, then Intel next generation 14a will attract major customers and that is vital for the foundry business. It will arrive in 2027.
There are still risks:
· Now Intel revival is not much more than promise it hast to fulfill in 2026.
· We do not know yet how many Intel 18a chips is Intel able to produce and at what costs.
· Intel is still weak in the AI arena and AI will be the major technology and IT business driver in the following years.
· The legacy X64 architecture is becoming a burden. Without major overhaul it will not be able to keep up with ARM. X64 modernization is under way but not an easy task.
So, what do I expect:
On the long run, Intel will remain a major player, leader in the laptop, workstation, and server processor market. A serious but smaller contender of TSMC in the foundry business. This also means moderate profit of the foundry because of the high amount of investment required to keep up with TSMC and Samsung.
Somewhere int the next 4–8-year, I think quantum computing will revolutionize the server market and Intel is going to be a winner. But it is a big bet.
Pro
- Intel's undervaluated, the market value is hardly above the value of assets.
- With the new Battlemage CPU, the company made a hit, which shows its engineering potential.
- With Intel 3 based processors Sierra Forests and Granite Rapids there is competitive server offering on the market.
- Intel 18a is - despite rumors - strong and healthy.
- Intel has some strong cards in the technology game like EUV, PowerVia, Foveros, Gate-all-around. There is a good chance to achieve technical leadership or at least parity.
- The US government and economy has a strong interest in keeping their only high-end chip producer.
- The investment Intel made in its chip technology will start to pay back in the following years.
- The market for top level integrated circuits will steadily grow in the future.
- I assume that the company will choose a new CIO with a strong foundry business background. It's what Intel needs now.
Contra
- Establishing and scaling up an independent foundry business is a huge effort and takes time.
- Mishaps with Raptor Lake and Arrow Lake harm Intel's reputation.
- Management: Pat Gelsinger sudden sacking just before his efforts started to bring results is embarrassing. There is no clear strategy now.
- The times when Intel was clearly ahead of the competition in chip technology are over.
Have other thoughts on Intel?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeHow well do narratives help inform your perspective?
Disclaimer
The user Csepregi_Horvath_Kristof holds no position in NasdaqGS:INTC. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
