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Intel Corp INTC

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Morningstar’s Analysis

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Intel’s Soft Margin Outlook Overshadows Solid Q3 Results, Shares Look Attractive Relative to $65 FVE

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Intel reported decent third-quarter results, though revenue came in modestly below management’s guidance due to shipping and supply constraints that impacted multiple segments. The firm has been experiencing a renaissance in the PC market, as COVID-19 has increased PC density (PCs per household) as more people work and learn from home. Similar to its peers, Intel’s management said demand continues to outstrip supply due to headwinds related to shortages of passive components and other supply chain hurdles. We note the firm is also dealing with a resurgent AMD that is pressuring Intel’s CPU market share, Apple’s shift to internal CPUs for its Mac PCs, and the transition from general-purpose computing to accelerated computing that relies on the likes of Nvidia’s GPUs.

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Company Profile

Business Description

Intel is the world's largest chipmaker. It designs and manufactures microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors. It was the prime proponent of Moore's law for advances in semiconductor manufacturing, though the firm has recently faced manufacturing delays. While Intel's server processor business has benefited from the shift to the cloud, the firm has also been expanding into new adjacencies as the personal computer market has stagnated. These include areas such as the Internet of Things, artificial intelligence, and automotive. Intel has been active on the merger and acquisitions front, acquiring Altera, Mobileye, and Habana Labs in order to bolster these efforts in non-PC arenas.

Contact
2200 Mission College Boulevard
Santa Clara, CA, 95054-1549
T +1 408 765-8080
Sector Technology
Industry Semiconductors
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 26, 2021
Stock Type Cyclical
Employees 110,600

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