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Intel's Struggles Continue, but Is a Turnaround Near?
INTCIntel(INTC) The Motley Fool·2025-04-28 19:00

Core Insights - Intel's first-quarter results showed flat revenue of 12.7billion,withadjustedEPSdown2812.7 billion, with adjusted EPS down 28% to 0.13, disappointing investors despite surpassing analyst expectations [1][8] - The company's stock has declined over 40% in the past year, reflecting ongoing struggles in the semiconductor market [1] Revenue Performance - Intel's product revenue decreased by 3% to 11.8billion,withtheclientcomputinggroup(CCG)down811.8 billion, with the client computing group (CCG) down 8% to 7.6 billion, while data center and AI (DCAI) revenue increased by 8% to 4.1billion[4][6]Thefoundrybusinesssawarevenueincreaseof74.1 billion [4][6] - The foundry business saw a revenue increase of 7% to 4.7 billion, but it continues to incur significant losses, reporting an operating loss of 2.3billion[5][6]OperatingMetricsGrossmarginsfellby410basispointsfrom412.3 billion [5][6] Operating Metrics - Gross margins fell by 410 basis points from 41% to 36.9%, impacted by pressures in the foundry, CCG, and DCAI segments [6] - Operating cash flow for the quarter was 813 million, while capital expenditures totaled 5.2billion,indicatingcontinuedinvestmentinthefoundrybusiness[7]FutureGuidanceIntelforecastsQ2revenuebetween5.2 billion, indicating continued investment in the foundry business [7] Future Guidance - Intel forecasts Q2 revenue between 11.2 billion and 12.4billion,whichisbelowanalystexpectationsof12.4 billion, which is below analyst expectations of 12.8 billion, suggesting a potential year-over-year decline of about 8% [8] - The company plans to cut operating expenses to 17billionthisyearand17 billion this year and 16 billion by 2026, alongside a 2billionreductionincapitalexpenditures[9]StrategicOutlookIntelaimstorefineitsAIstrategytodevelopfullstackAIsolutions,althoughitfacessignificantcompetitionfromNvidia[11]Despitecurrentchallenges,Intelscorebusinessremainssteady,andthecompanyhassubstantialphysicalassetsfromitsinvestmentsinfoundryoperations,havingspentover2 billion reduction in capital expenditures [9] Strategic Outlook - Intel aims to refine its AI strategy to develop full-stack AI solutions, although it faces significant competition from Nvidia [11] - Despite current challenges, Intel's core business remains steady, and the company has substantial physical assets from its investments in foundry operations, having spent over 200 billion in capital expenditures over the past two years [12][13] Investment Considerations - Intel's stock trades at a price to tangible book value (TBV) ratio of 1.2, suggesting that investors can acquire shares at approximately the value of its physical assets [13] - There is potential for value appreciation in Intel's stock, and investors may consider accumulating shares during price dips [15]