Intel Corporation (NASDAQ:INTC) is an American multinational technology company. It is the world’s largest semiconductor chip manufacturer. It is also the developer of the x86 series of instruction sets found in most personal computers. Its products are used to build almost all electronic devices, including personal computers. Intel’s products are used to build computers, smartphones, tablets, and other electronic devices.
Intel is currently trading at a dirt-cheap valuation, despite steep declines in the company’s revenue and earnings. The trailing P/E ratio is only six. At this cheap multiple, Intel stock isn’t a value play. And despite Intel stock’s long-term growth prospects, analysts believe that earnings will remain stable for at least another few years.
Intel recently reported its quarterly earnings, which were mixed. Revenue was down nearly 22% year-over-year and fell by almost 30% on a non-GAAP basis. Intel also lowered its full-year profit and revenue guidance, and said it would target $3 billion in cost cuts by 2023. That’s below analysts’ expectations and a disappointing result for the stock.
After the company reported its Q3 results, Intel stock fell. Analysts believe the company missed their expectations and cut their outlook for the year. Analysts at Citigroup maintain a Neutral rating on the stock, but lowered their price target on Intel to $27 from $30. This is a significant downgrade from the stock’s previous high of $52.
The new leadership at Intel Corporation may be able to turn the company’s fortune around. Previously, Intel was a dominant player in the personal computer industry. It partnered with Microsoft to form a so-called Wintel alliance. However, the growth of smartphones and other devices has diminished Intel’s influence.
The CHIPS Act is another positive development for Intel. It provides a new funding source for capital expenditures, which should support future shareholder capital returns. Intel also recently announced a $30 billion investment with chip maker Brookfield in Arizona. The new deal builds off the momentum generated by the CHIPS Act, which U.S. Vice President Joe Biden signed on August 9, 2022.
Although Intel’s largest business, PC sales, are slowing, and market share is decreasing, the company is fighting hard to regain lost ground. With new products aimed at AMD and the upcoming launch of its Raptor Lake processors, Intel is hoping to regain its mojo. However, investors should be cautious until these new chips are ready for market.
PC sales have fallen precipitously this year, and are expected to fall 12.8% by 2022. In addition, Intel’s client computing group, which makes up half of its top line, has struggled as PC sales decline. Second-quarter revenue from this group fell 25% from last year’s level, which means the company’s stock is not likely to grow as fast as expected.
