Intel (INTC) Could Be 80% Undervalued On Its Foundry Narrative

Intel (INTC) shares are back in focus after the company appointed Dean Jarnac as executive vice president and chief sales officer, putting a new leader in charge of its global sales engine.

See our latest analysis for Intel.

Intel's recent executive changes and partnerships, including the Terafab joint venture and new foundry customers, come as momentum has cooled in the short term. The 30-day share price return is down 7.46% and the 90-day share price return is down 21.47%, while the year-to-date share price return of 158.13% and a very large 1-year total shareholder return highlight how strong the longer term rebound has been.

If Intel's move in AI and chips has your attention, this is a useful moment to widen your watchlist with 56 AI infrastructure stocks

Intel's share price has surged over the past year while short term returns have cooled, and analyst targets sit above a triple digit spot price as one intrinsic model points to a discount. Where does fair value really sit in that spread?

Most Popular Narrative: 79.7% Undervalued

The narrative fair value of Intel sits at $500.93 against a last close of $101.65, which is a wide gap that quickly grabs attention.

They are the single largest USA based foundry.

Comparing Intel vs TSMC: is essentially comparing the USA vs Taiwan

Read the complete narrative. Read the complete narrative.

Curious how that kind of upside case is built? The narrative leans on aggressive revenue expansion, improving profit margins and a future earnings multiple usually reserved for market leaders. The assumptions stack together in a way that radically reshapes what Intel could be worth on paper.

Result: Fair Value of $500.93 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Intel's narrative relies on strong x86 software advantages and growth in the foundry segment, which could be challenged by competing chip architectures and execution missteps.

Find out about the key risks to this Intel narrative.

Another View on Intel's Fair Value

While the user narrative points to a fair value of $500.93 for Intel, our DCF model presents a cooler picture. At a last close of $101.65, the stock sits above an estimated future cash flow value of $89.34, which implies it is overvalued on this framework. That is a very different message to the bullish narrative and raises a simple question for investors: Which set of assumptions feels more realistic for Intel's future cash generation?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Intel for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With such a mixed picture around Intel, it makes sense to move quickly and check the numbers for yourself so you can form an independent view based on the 1 key reward and 3 important warning signs

Looking for more investment ideas beyond Intel?

If the Intel story has you thinking bigger about your portfolio, do not stop here. Use this moment to scan fresh opportunities before other investors move first.

• Spot potential value opportunities early by checking companies that show up in the 52 high quality undervalued stocks.
• Strengthen your focus on resilience by reviewing stocks highlighted in the solid balance sheet and fundamentals stocks screener (48 results).
• Hunt for lesser known opportunities with solid fundamentals by scanning the screener containing 21 high quality undiscovered gems.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com