The Motley Fool·2026-01-29 04:30Core Viewpoint - Intel's stock has seen significant gains recently, but the company still lags behind its manufacturing competitor, TSMC, in terms of growth and profitability [1][4]. Intel Overview - Intel's stock has more than doubled in the last six months, despite a pullback after disappointing fourth-quarter earnings guidance [1]. - The U.S. government acquired a 9.9% stake in Intel, and Nvidia invested $5 billion, providing crucial capital for Intel's foundry business and AI product development [2][3]. - Under new CEO Lip-Bu Tan, Intel is focusing on cost-cutting, streamlining operations, and cultural changes to enhance competitiveness [3]. Financial Performance - In Q4, Intel's revenue fell 4% to $13.7 billion, with a GAAP loss of $591 million, although it was profitable on an adjusted basis [4]. - For Q1, Intel expects revenue between $11.7 billion and $12.7 billion, indicating a sharp sequential decline, with adjusted earnings per share projected to break even [5]. Comparison with TSMC - TSMC, with a market cap of $1.8 trillion, is the leading contract manufacturer of semiconductors, producing over half of the world's contract chips and 90% of advanced contract chips [6][7]. - TSMC's Q4 revenue rose 25.5% to $33.7 billion, with an operating margin of 54%, translating to $18.2 billion in operating income [7]. - TSMC generates 77% of its revenue from advanced chips (7nm or less) and has a price-to-earnings ratio of 32, making it slightly more expensive than the S&P 500 [8]. Future Outlook - Intel's future in the foundry business relies on advanced processes like 18A (1.8nm), but meaningful competition with TSMC is likely years away [10]. - TSMC is expected to grow revenue at a compound annual rate of around 25% through 2029, maintaining a strong operating income [11]. - Despite Intel's turnaround narrative, TSMC is viewed as a safer investment, especially amid the ongoing AI boom [11].