Intel Stock Gets Slammed. Is This a Buy-the-Dip Moment?

Core Viewpoint - Intel's recent earnings report showed solid demand for its products, particularly in AI, but supply challenges are expected to hinder near-term performance, leading to a decline in stock value despite previous gains [1][2][6]. Financial Performance - Intel reported fourth-quarter revenue of $13.7 billion, a 4% decrease year over year, with non-GAAP earnings per share of $0.15, reflecting a 15% increase year over year [3]. - For the full year, revenue was $52.9 billion, remaining essentially flat year over year [3]. - The company anticipates first-quarter revenue between $11.7 billion and $12.7 billion, which is approximately 11% lower than fourth-quarter revenue, with expected non-GAAP earnings per share of $0.00 [4]. Supply and Demand Dynamics - Supply constraints are identified as the primary issue affecting Intel's outlook, with management indicating that available supply will be at its lowest in Q1 before improving in Q2 and beyond [4][10]. - Demand fundamentals across Intel's core markets remain strong, particularly for AI-related products, which saw a 9% year-over-year revenue increase to $4.7 billion in the fourth quarter [5][6]. Valuation Concerns - Intel's market capitalization is around $230 billion, and the stock is considered expensive given the lack of profitability on a GAAP basis and the anticipated decline in sales for Q1 [7][8]. - The current price-to-sales ratio exceeds 4, which is significantly lower than that of competitors like Nvidia and Broadcom, but still high enough to suggest that investors expect future profitability [9]. Future Outlook - The market is pricing in expectations for improved supply and continued demand growth, but there are concerns about execution issues that have historically affected the company [10][11]. - Management has expressed optimism about supply improvements starting in Q2, and demand visibility remains positive [10].