Chip maker Intel INTC +1.54% is set to offer an update on its foundry business on Wednesday as it continues to build out new facilities to expand the custom chip-making Based on that, INTC generated $22.5 billion and paid out $5.8 billion in dividends over the trailing 12 months, equating to a dividend payout ratio of 26% based on operating cash flow. For the full insights, watch the video below and consider subscribing. In a negative sign, INTC stock is trading below its 50-day moving average line, where it has faced resistance. There are What's In Store For Investors. Thats after 4.6% growth in 2020 from $4.72 a share in 2019. Intel announced in December plans to take Mobileye public, which could unlock $50 billion in value. I also see value in Intel's IDM 2.0 strategy, with a $30 billion investment to build 2 new fabs to expand Intel's foundry business. The current production schedule calls for moving from 10-nanometer (Intel 7) process nodes to 7-nanometer (Intel 4) production by late 2022. Intel isn't doomed, but its stock isn't undervalued. Additionally, Intel has fallen to what looks like an outlandishly low earnings multiple. Underlying Intel's revenue growth projections are two big assumptions. There are far better semiconductor stocks to buy now that have a much better risk-to-reward payoff than Intel stock offers. In this article. But if we compare both companies' valuations right now, you would say Intel is very cheap and has growth potential if the comeback story is on with the new CPUs, GPUs, and IDM 2.0. Thats the risk I worry about with Intel stock. It would be one thing if Intel was struggling while rivals puttered along. While some may point out that free cash flow should be used to measure dividend safety instead, I believe operating cash flow is more apt for cyclical industries, especially the semiconductor industry, which has its up and down cycles in terms of capital investment. Intel promises it will recapture its design and manufacturing leadership by 2025. One cheap tech stock that stands out is Intel (INTC 1.61%). Intel (NASDAQ: INTC) hit a five-year low on Monday, August 22, with the semiconductor industry and the broader market sell-off concerned about a more aggressive Federal Reserve (Fed). Intel stock has a weak IBD Relative Strength Rating of 27 out of 99. Generally speaking, the higher a company's price-to-earnings ratio, the more optimistic investors are about that company's ability to grow its profits in the future. Though the NEX segment held up relatively well in the last year (it reported record revenue in 2022), Intel is in cost-cutting mode to try and shore up its withering profit margins. While TSMC (TSM) is also planning a $20 billion chip facility in Chandler, Arizona, it is doing it at the behest of the U.S. government's push for domestic chip manufacturing and less foreign reliance. Intel stock lacks the qualities that make a CAN SLIM stock, under IBD trading principles. Free cash flow has increased 51% in total over the last five years, and Intel's return on invested capital -- a key measure of profitability -- has also improved from 12% to 18%. To make the world smarter, happier, and richer. And for investors who believe that perhaps that means the rally has gone too far, Nvidia topped Intel before its earnings disappointment, and ahead of what looks to be blowout fiscal Q2 numbers from Nvidia this week. Its one of those companies thats bound to be a leader in our future. And if Intel doesn't deliver, they'll have to pay Ohio back on the tax breaks to boot. It is a trusted brand going back decades and possesses a superior manufacturing scale, which can't be discounted. While it led the industry for decades, other chip designers and manufacturers eclipsed it due to its development struggles. A question worth asking, then, is this: Why is Intel stock so cheap? Nevertheless, despite the run-up in the stock, the company's shares are still quite cheap. The semiconductor industry has experienced shortages and rapid increases in demand amid the explosion of new tech applications. Though Nvidia's fiscal second quarter ends one month after Intel's, it generated $15 billion in the first half of its fiscal year. Why Intel Stock Those mistakes, which mainly occurred under former CEO Brian Krzanich's watch from 2013 to 2018, handed a big slice of the CPU market to AMD. Don't Count Intel Out in the AI Chip Race, What Intel, Lam Research, Applied Materials, and Micron Stock Investors Should Know About Recent Updates, Intel Reorganized Its Manufacturing Business: Why It Doesn't Mean Anything for the Stock Yet, Intel's Vast Cost-Cutting Plan Takes Shape, Intel Shifts Gears: Foundry Services Take the Spotlight, 77% of Warren Buffett's $366 Billion Portfolio Is Invested in Only 6 Stocks. Here are five reasons why Intel stock is a bargain. has piqued my interest in recent months because of the drastic fall in share price. Why is Intel (INTL) so cheap right now? : r/investing - Reddit And then there's the data center segment, where all the semiconductor industry growth is really to be had these days. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Rather, the inability to execute has the potential to impact Intels results going forward as well. I am not receiving compensation for it (other than from Seeking Alpha). It expects that ambitious plan to boost its annual capex from $18.7 billion in 2021 to $27 billion (36% of its estimated revenue) in 2022 and for those expenses to "increase above historical levels for the next several years.". *Average returns of all recommendations since inception. Its bound for long-term success thats perhaps even more impressive than the likes of Nvidia, only the space it focuses on is mobile communication. Intel is spending $20 billion to build new chip plants in Arizona. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. While it is investing heavily to become a player in the foundry business and regain its technical lead, it remains unknown whether it will succeed in either endeavor. Intel's revenue increased 2% year over year in Q2 to $18.5 billion while adjusted earnings per share jumped 12% to $1.28 per share. The Motley Fool->, Intel (NASDAQ: INTC) is finally taking steps that its scrappy underdog competitor Advanced Micro Devices took over a decade ago: It will be creating some separation between its chip manufacturing and chip design departments. For the time being, Intel's reorganization to give investors better insight into progress doesn't mean much for the stock. I have no business relationship with any company whose stock is mentioned in this article. Is this happening to you frequently? Intel has a very difficult and expensive uphill battle ahead of it as it tries to catch up to its peers on multiple fronts. While Intel has its headwinds, I believe they are more than priced into the stock. Cost basis and return based on previous market day close. That means there are much better stocks to investigate in the group. Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks. Big challenges lay ahead, though, including the wooing of big chip design houses like Broadcom that have been reluctant to pledge explicit support for IFS -- at least thus far. In fact, theyre roaring ahead. The Motley Fool has a disclosure policy. Unfortunately, in the world of chip design, stopping investment in research and development is essentially waving the flag in surrender. Chipmaking giant Intel (INTC) has had a rough go lately. Intel reported strong demand across all segments for the third quarter, with record results from data centers, autonomous driving solutions (Mobileye), and the Internet of Things. 5 Reasons to Buy Intel Stock Right Now | The Motley Fool Will Healy has positions in Advanced Micro Devices. Before it demonstrates positive results for its flailing business, I can't get on board with buying Intel stock. Don't underestimate the market share leader Advanced Micro Devices has outmaneuvered The chip giant generates $17 billion in free cash flow and trades at just 10 times earnings. But if either, or both factors I mentioned play out, then there could be upside compared to current analyst revenue and EPS estimates. Boring Dow? The investment cut apparently includes the Tofino ethernet switch chips, which trace their roots to a small acquisition in 2019. When picking the best stocks to buy, I usually like to look for picks that are behind groundbreaking innovations, not just because theyre affordable. Invest better with The Motley Fool. The RX 6800 XT and RX 6800 are about $750 and $600 overpriced, respectively. Manufacturing the most advanced chips in the world has gotten exponentially harder, not to mention more expensive. Analysts polled by FactSet expected Intel earnings of 78 cents a share on sales of $18.33 billion. In fact, AMD just launched its 7nm Ryzen line, targeting the fast-growing (and high-margin) PC gaming market. Intel still expects its adjusted revenue to rise 2% in 2022, even as it faces slowing PC sales in a post-lockdown market, but it's also bracing for a 31% drop in its adjusted earnings per share (EPS) as it ramps up its spending. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. And as cheap as it might look, its far too optimistic to argue that risk is fully priced in. Today's Change (0.75%) $0.83 Current Price $111.00 AMD Key Data Points Market Cap $177B Day's Range $109.84 - $112.17 52wk Range After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*. On March 15, Intel disclosed plans to invest as much as 80 billion euros, or about $85 billion, in the European Union over the next decade. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. The Motley Fool has a disclosure policy. Chip maker Intel INTC +1.54% is set to offer an update on its foundry business on Wednesday as it continues to build out new facilities to expand the custom chip-making business. Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. there is no sense to invest in INTEL when AMD is waiting for market rally to rocket up. To counter this, AMD has already cut the prices of some of its CPUs. Get instant access to exclusive stock lists, expert market analysis and powerful tools with 2 months of IBD Digital for only $20! Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Revenue grew 5% year over year, with earnings per share advancing by 64%. That's why it's important to take a look at the statement of cash flows. I am staying out of the market until this recession settles out. Readers are encouraged and expected to perform due diligence and draw their own conclusions prior to making any investment decisions. The good news is that the market is expanding at an exponential rate, opening plenty of opportunities for Intel to capture the upside, as noted by the EVP and GM of Intel's Datacenter and AI Division during a technology conference this week: Data continues to grow 50% every single year. Intel Stock: Would An Investment Into ARM Be Good For Investors? Intel Stock: Low Valuation Makes it Worth The Wait - Yahoo Finance If you have an ad-blocker enabled you may be blocked from proceeding. While that falls well short of the 25 years required to claim Dividend Aristocrat status, it is a long enough track record to negatively affect the stock price if the streak of payout hikes ends. It's far more difficult for an overseas company to establish a reputation with local employees, recruit/train, and manage than it is for Intel, which already has an established presence and local experience. Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. I want to mention that Barrons has a feature interview this week with Dan Niles, the tech investor and manager of the Satori Fund I would encourage you to read. The best growth stocks have a Composite Rating of 90 or better. The chip manufacturing group ranks No. AMD and Nvidia are valued five times as richly. At some point, they will have to make a return on the billions they were handed by the U.S government. Wall Street was looking for earnings of 80 cents a share on sales of $18.34 billion in the June quarter. Returns as of 06/30/2023. Looking for a portfolio of ideas like this one? Moreover, Intel is a huge beneficiary of recent environmental and infrastructure legislation due to the recent and massive investment in US-based manufacturing. In fact, Intel stock trades at a little over 10x next years earnings, and its dividend yields a healthy 2.7%. But its bound to become its own king with an approach to mobile interaction that weve never seen before. After Krzanich abruptly resigned in 2018, his successor, Bob Swan, immediately focused on wasteful buybacks and cost-cutting measures instead of aggressively chasing TSMC. Invest better with The Motley Fool. It's a business model that worked wonders. It pioneered the x86 architecture for microprocessors, and in recent years has made moves beyond its core market to expand into areas such as AI, automotive, and IoT, with acquisitions including Altera and Mobileye. To report a factual error in this article. 1125 N. Charles St, Baltimore, MD 21201. It's still far too soon to declare victory. Bill Zettler Investing Group Leader Follow Summary Intel has committed to more than $100 billion in CAPEX to build new fabs. To drive more accountability, and to eventually give the chip design departments more flexibility in tapping other chipmakers for help (Intel's upcoming Meteor Lake chips are, in part, being made by none other than TSMC), Intel's mostly internal manufacturing financials will be reported separately from Intel's chip design departments. Members of Hoya Capital Income Builder get exclusive access to our model portfolio. The analyst estimates seem consistent with Intel's own statements. $39.69 Whats Happening With INTC Stock? The next potential catalyst for Intel stock could be the company's June-quarter earnings report, due on July 28. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. In 2021, Samsung overtook Intel to become the world's No. Moreover, Intel has embraced its existence as a dividend payer. Lastly, Intel is striking back at AMD with new chips, such as its new "Alder Lake" CPUs, which roughly match the performance of AMD's smaller Ryzen CPUs by consuming more power. Almost without exception, theyve underperformed the market. Much Invest better with The Motley Fool. Intel still holds a massive influence over the semiconductor industry. On the earnings front, analysts expect a roughly 10% decline to this years estimate of $4.75 per share. The investments would span research and development, manufacturing, and packaging technologies. Its not even a problem that is only in the past. That's right -- they think these 10 stocks are even better buys. That's not an ideal or permanent solution for countering AMD, but it could help Intel tread water for now in the PC market. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. But thats not the case. And for us, we have a lot of opportunities, particularly in the areas of high growth workflows like AI, like networking, like encryption, like storage, where we have strong leadership position. Moreover, management has laid out a clear roadmap for its chip technology over the next four years. By some metrics, Intel may actually appear like an incredible value at this point. However, on June 7, Intel executives commented at a conference that the near-term business outlook is worsening. As InvestorPlaces chief technology analyst, Ive worked feverishly with our veteran research team to identify the best stocks to buy. Morningstar has a fair value estimate of $50 and sell side analysts have an average price target of $40.37, translating to a potential one-year 34% total return based on the lower of the two estimates. The answer is simple. Or should they still consider it to be an undervalued turnaround play at just 14 times forward earnings? Intel will maintain majority ownership of the driverless solutions unit. Stock Cost basis and return based on previous market day close. Late on April 28, Intel edged above analyst expectations for the first quarter, but it missed views with its second-quarter outlook. Intel's stock looks cheap, but it might deserve that discount right now. The company's shares. To make the world smarter, happier, and richer. Intel stock hit a 19-year high of 69.29 in January 2020 ahead of the coronavirus stock market correction. Operating expenses can rise as the company tries to invest behind the struggling business or build out a new one to replace it. Again, look at other cheap mega-cap stocks. Not so fast. Intel This could be a reliable cash generator for decades to come, as Intel utilizes its manufacturing prowess and scale to manufacture chips for other companies. But Intel stock would face a difficult trek through overhead supply to reach that pattern's buy point of 68.59. The bulls believe Intel's turnaround plan will eventually pay off -- even if it involves near-term pain. The company has fallen behind chip foundry Taiwan Semiconductor Manufacturing (TSM), which is already mass producing chips at 5-nanometer scale.