Intel Corporation (INTC): A Bear Case Theory

Core Thesis - Intel Corporation's stock performance is influenced by optimism surrounding partnerships and U.S. policy support, despite mixed operational results [2][4]. Financial Performance - Intel's Q3 revenue increased by 3% year-over-year to $13.7 billion, with an EPS of $0.23 exceeding expectations [2]. - The company's gross margin was reported at 38%, surpassing guidance, but profitability in the Client Computing Group (CCG) declined [4]. Future Outlook - Management's Q4 guidance indicates a sequential revenue decline, with only modest recovery expected in PCs and ongoing weakness in Data Center & AI and Foundry segments [3]. - Intel's capital expenditure for 2025 has been reduced to $18 billion, reflecting limited visibility on external orders and a cautious outlook [4]. Competitive Landscape - Intel faces significant competition from AMD, Nvidia, and TSMC, with its path to profitability in the Foundry segment appearing ambitious amid soft demand [4][5]. - Structural risks include heavy exposure to China and geopolitical uncertainties, which may impact future performance [5]. Valuation Perspective - The fair value of Intel's stock is estimated at approximately $26 per share, suggesting a potential downside risk as the current trading level is around $38 [5]. - The recent stock rally, attributed to Nvidia's $5 billion investment, may be more narrative-driven than based on fundamental improvements [6].