Intel Corp (NASDAQ:INTC), a tech giant known for its innovations in computing and semiconductor manufacturing, has shaped the personal computer industry and is now pushing into AI technology.
Despite its historical significance and technological prowess, the company’s stock performance has faced challenges in recent times. While shares of Intel have gained 33.60% over the past year, the year-to-date performance indicates a downturn, with a decline of 12.56%.
Also Read: Intel Stock Is Sliding After The Bell: What’s Going On?
The Intel Analyst
JPMorgan’s Harlan Sur is underweight Intel stock and has a price target of $37.
The Intel Thesis
Intel Foundry Segment To Drive $15+/Year In Revenues
According to Sur, Intel’s recent unveiling of its new segment reporting structure for ‘Intel Foundry’ as a pivotal moment in the company’s narrative. This move will force both the manufacturing organization and the business units to focus on cost efficiencies and make better economic decisions. The new segment should “drive better transparency and decision making/efficiencies” at Intel, according to Sur.
Intel’s ambitions in the foundry market, as outlined by Sur, are notable. Despite facing challenges and experiencing muted traction, Intel’s goal of reaching $5 billion in external customer foundry revenues by 2027 and surpassing $15 billion by 2030 demonstrates its confidence in this segment’s growth potential. The new segment represents a significant opportunity for revenue expansion and market diversification.
Sur also noted that by 2030, Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM) aka TSMC would be “10x larger” than Intel in foundry revenues.
Long-term Target Of 60% Margin Intact
In his note, Sur highlighted Intel’s commitment to long-term targets. The company aims to achieve a 60% non-GAAP gross margin and 40% non-GAAP operating margin by 2030. The goal was first announced in 2022 but has since been pushed back due to:
- recent cyclical downturn
- datacenter share loss to Advanced Micro Devices (NASDAQ:AMD), and
- muted traction on datacenter accelerator products
Intel’s Transition To EUV Technology
Integral to Intel’s future success, as Sur points out, is its transition to Extreme Ultraviolet Lithography (EUV) technology. This shift promises not only cost efficiencies but also “40%-50% gross margins”. Intel is poised to capitalize on the potential of EUV technology to bolster its competitive position, said Sur.
Despite challenges posed by competitors like TSMC, Intel’s resilience and strategic vision offer compelling reasons for investor consideration. While short-term headwinds may temper near-term performance, Intel’s long-term trajectory remains anchored in innovation, resilience, and strategic vision.
INTC Price Check: Shares of Intel closed 1.3% lower at $43.94 on Tuesday.
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