Analyst Note
| Abhinav Davuluri, CFA |Intel reported solid first-quarter results slightly above guidance thanks to data center strength. The firm is dealing with an assortment of headwinds ranging from a resurgent Advanced Micro Devices 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. Nonetheless, we are positive on Intel's IDM 2.0 strategy to get its manufacturing back on track and develop a more substantial foundry offering while outsourcing more products to TSMC. Shares fell nearly 4% after hours, which we attribute to the soft revenue outlook for the second quarter, though we note management reiterated its 2022 sales outlook of $76 billion, which implies a stronger second half. We are maintaining our $65 fair value estimate for wide-moat Intel, as we think 2022 will be the near-term trough for margins as the firm invests in its technology roadmap.