Intel(US:INTC) HTSC·2026-01-25 10:45Investment Rating - The investment rating for Intel (INTC US) is maintained as "Buy" with a target price of $71.50 [6][4]. Core Views - Intel's Q4 2025 performance exceeded expectations, but the guidance for Q1 2026 is cautious, leading to a stock price drop of over 12% [1]. - The focus should be on the progress of the Foundry transformation and the advancement of foundry orders, rather than short-term financial results [1]. - The company is optimistic about the yield and customer progress for the 18A process node and the demand for Panther Lake [1]. Summary by Sections Financial Performance - Q4 2025 revenue was $13.7 billion, down 4.1% year-over-year but exceeded expectations by 2.1% [1]. - Non-GAAP gross margin and EPS were 37.9% and $0.15, respectively, surpassing expectations [1]. - Q1 2026 revenue guidance is between $11.7 billion and $12.7 billion, with a Non-GAAP gross margin of 34.5% and EPS of $0.00, indicating ongoing cost challenges [1]. Foundry Business - Foundry revenue for Q4 2025 was $4.5 billion, above the expected $4.4 billion, reflecting a year-over-year increase of 3.8% [2]. - The introduction of the 18A process node, featuring RibbonFET and PowerVia technologies, positions Intel to compete with TSMC [2]. - The company is expected to receive support from the U.S. government and industry partners to secure foundry orders [2]. Market Dynamics - CCG revenue was $8.2 billion, slightly below expectations, while DCAI revenue was $4.7 billion, reflecting strong data center demand [3]. - Intel's market share in the x86 CPU market remains strong, with a reported 72% share in the server segment [3]. - The company plans to enhance its CPU offerings through integration with NVIDIA's GPU technology [3]. Valuation and Forecast - Revenue forecasts for 2026 and 2027 have been raised by 2.6% and 4.2% to $57.5 billion and $61.0 billion, respectively [4]. - The valuation method has been adjusted to a price-to-book (PB) basis, with a target PB of 2.5x for 2026 [4]. - The target price has been increased to $71.50, reflecting confidence in the company's operational improvements and market positioning [4].