AI Market Overview - The AI boom has driven significant gains across the stock market, impacting companies in hardware, software, infrastructure, and supporting services [1] - Many companies in the AI supply chain have experienced substantial growth over the past two years [1] - Despite the overall market surge, some AI-related stocks have not reached record highs and may be undervalued [3] Intel's Current Challenges - Intel has faced declining sales in recent years despite the increasing demand for AI chips [4] - The company is no longer the largest semiconductor company by revenue and has lost its position in the Dow Jones Industrial Average to Nvidia [4] - Recent leadership changes, including the departure of CEO Pat Gelsinger, signal potential major strategic shifts [5] - Intel is considering spinning off its Intel Foundry business and may sell some of its holdings in Mobileye to raise cash [5] Intel's Valuation and Strategic Investments - Intel's stock is currently undervalued, trading at 1.6 times sales and 0.9 times book value [7] - The company has significantly increased its infrastructure investments to approximately $25 billion annually over the last three years, up from a long-term average of $15 billion [9] - These investments are focused on building and upgrading chip-making facilities globally, positioning Intel as a serious alternative to Asian giants like Taiwan Semiconductor and Samsung [9] - Some of Intel's new or improved chip-making facilities are already operational, with others set to come online in stages over the next five years [10] Future Growth Prospects - Intel is transforming into a different type of semiconductor business, potentially becoming a leader in the American AI hardware market [12] - By 2030, Intel could achieve a price-to-book ratio closer to Taiwan Semiconductor's 8.3, especially if the foundry division is spun off [11] - The company's strategic investments and long-term plans are expected to have a significant impact on its business over the coming years [10][12]

Subscription Benefits - A single subscription to Beyond the Wall Investing can save thousands of dollars annually on equity research reports from banks, providing access to the latest and highest-quality analysis [1] Intel Corporation (INTC) Analysis - Coverage of Intel Corporation (NASDAQ: INTC) (NEOE: INTC:CA) was initiated with a "Buy" rating in mid-July 2024, anticipating steady recovery in revenue from key segments CCG and DCAI [2] - The analysis is led by the investing group Beyond the Wall Investing, which offers a fundamentals-based portfolio, weekly insights from institutional investors, regular alerts for short-term trade ideas based on technical signals, ticker feedback by request, and community chat [2]

Market Overview - The PC graphics card market has been dominated by Nvidia and AMD, with Nvidia holding the leading position [1] - Intel entered the market in late 2022 with its Arc Alchemist graphics cards, aiming to provide alternatives to consumers [1] Initial Challenges - Intel's initial launch of A750 and A770 graphics cards faced significant software driver issues, leading to poor performance in older games and numerous bugs [2] - The company failed to gain meaningful market share or disrupt the existing duopoly [2] Second Attempt with Battlemage - Intel has improved its software through continuous updates, stabilizing its graphics card business [3] - The company launched two new graphics cards, B570 and B580, targeting the midrange market with prices of $219 and $249 respectively [4] - Major architectural changes in the new cards promise substantial improvements in performance and efficiency [4] Performance and Reviews - The B580 graphics card has received positive reviews, outperforming Nvidia's RTX 4060 and AMD's 7600 XT in both rasterization and ray tracing while being more affordable [5] - Software issues have improved, with no game-crashing bugs reported during testing [6] Strategic Implications - Success in the gaming GPU market could create a new revenue stream for Intel and help the company sell more CPUs in its competition with AMD [7] - Intel's new graphics cards have a greater chance of winning meaningful market share, but the timing is problematic due to the expected launch of next-generation products by Nvidia and AMD [8][9] Future Competition - Nvidia is rumored to announce its RTX 5000 series soon, while AMD is likely to reveal its RX 8000 series early next year [9] - Intel may benefit if competitors focus on high-end graphics cards first or are not aggressive on pricing, but new competition is expected next year [9] Consumer Confidence - Intel needs to convince consumers that it will not abandon the market and that software issues will be resolved this time around [10]

Core Viewpoint - Intel's stock has seen a significant decline of over 55% this year, trading at approximately $21 per share, primarily due to market share losses in the CPU sector and challenges in its foundry business, despite substantial investments of around $25 billion in the last two years [1] Group 1: Foundry Business and Technological Developments - Intel's foundry business reported a $7 billion operating loss on $18.9 billion in revenue, but a turnaround is anticipated with the upcoming 18A fabrication process technology [1][2] - The 18A process, featuring advanced technologies like RibbonFET and PowerVia, is expected to enhance performance and power efficiency, with a node size of 1.8 nanometers, slightly ahead of TSMC's N2 process [2] - Intel has achieved critical milestones with the 18A process, with expectations for external customers to begin designs in 2025 and large-scale production to follow [3] Group 2: Contracts and Geopolitical Factors - Intel has secured significant contracts, including with the U.S. Department of Defense, which could bolster its foundry business amid increasing demand for domestic chip production [3][5] - The geopolitical landscape may favor Intel, as the emphasis on U.S. manufacturing could lead to regulatory support and potential tariffs on foreign chip production, driving more business to Intel [5][6] Group 3: Market Position and Valuation - Intel's stock is currently trading at less than 1x its book value, indicating that the market is undervaluing its technological capabilities and future potential [10] - Earnings projections show a decline to about $1 per share in 2025, down from nearly $2 in 2022, but a recovery in demand could reverse this trend [10] - The company is considering separating its foundry business into a subsidiary, which could unlock additional value for shareholders [11]

Group 1 - The article expresses disagreement with Intel Corporation's Board of Directors' decision to remove Patrick Gelsinger as CEO, highlighting the progress made under his leadership, including the introduction of five new chip manufacturing nodes and new CPUs and AI accelerators [1] - The leadership of Patrick Gelsinger is credited with significant advancements in Intel's technology and product offerings, suggesting a positive trajectory for the company during his tenure [1] Group 2 - The article does not provide any financial disclosures or positions related to Intel Corporation or other companies mentioned, indicating a neutral stance from the author [2] - There are no recommendations or investment advice given in the article, emphasizing that past performance does not guarantee future results [3]

Group 1 - The article discusses expectations for improvements in Intel Corporation's growth prospects in the second half of the year and into 2025, driven by various factors [1] - Khaveen Investments is a Macroquantamental Hedge Fund that manages a globally diversified investment portfolio, focusing on cutting-edge technologies [1] - The investment strategies employed by Khaveen Investments include global macro, fundamental, and quantitative strategies, targeting sectors such as Artificial Intelligence, Cloud Computing, and FinTech [1] Group 2 - The article does not provide any investment, tax, accounting, or legal advice, and is intended for educational purposes only [2] - It emphasizes that past performance is not indicative of future results and does not provide recommendations for specific investments [3]

Industry Overview - The technology sector, particularly companies involved in artificial intelligence (AI), has seen significant gains in major stock indexes, including the S&P 500, Nasdaq, and Dow Jones Industrial Average, with Nvidia being a standout performer due to its AI capabilities [1] - The AI market, currently valued at $200 billion, is projected to exceed $1 trillion by the end of the decade, presenting substantial investment opportunities for early entrants [2] Company Analysis: Super Micro Computer - Super Micro Computer's stock surged by 188% in the first half of the year, driven by high demand for its server and workstation products from AI customers, resulting in triple-digit quarterly revenue growth [4] - However, the company faced setbacks in the second half of the year, including a short report from Hindenburg Research, delayed financial filings, and the resignation of its auditor, which raised concerns about a potential Nasdaq delisting [5] - Following a 67% decline in stock price after the Hindenburg report, Super Micro has recently appointed a new auditor and submitted a compliance plan to Nasdaq, which has granted an extension until February 25 for filing [6][7] Company Analysis: Intel - Intel remains a dominant player in the central processing unit (CPU) market but is losing market share to competitors like Advanced Micro Devices and has struggled to establish itself in the AI sector [8] - The company's transition to becoming a chipmaker has raised concerns among investors, particularly regarding the impact of significant spending on free cash flow, leading to a 26% drop in stock price following the announcement of a $10 billion cost reduction program and workforce cuts [9] - Recent leadership changes, including the ousting of CEO Pat Gelsinger, have created uncertainty about Intel's strategic direction moving forward [10] Investment Outlook - Super Micro Computer shows potential for recovery, but the lack of audited financial reports is a critical factor for investors to consider before making decisions [11] - Intel's future direction remains unclear due to recent leadership transitions, making it difficult to assess the company's investment potential [12] - Both companies warrant close monitoring in the upcoming year, but caution is advised before making any investment commitments [13]

Core Viewpoint - Intel's co-CEOs are considering a potential separation of the company's manufacturing and products businesses to address poor financial performance and political implications [1][4]. Group 1: Business Structure and Strategy - Intel is creating more separation between its manufacturing and products businesses, with a formal split still being a possibility [1][6]. - The company is forming a subsidiary for Intel Foundry and establishing a separate operational board for it, indicating a move towards greater independence for the foundry operations [7][8]. - CFO David Zinsner mentioned that the businesses are already run fairly independently, but further steps are being taken to facilitate a potential split [3][6]. Group 2: Leadership and Management - Until a permanent CEO is appointed, the co-CEOs will manage most areas together, but Zinsner will specifically oversee the Foundry business [8]. - The separation of operations and inventory management software for the two sides of the business is part of the ongoing changes [7]. Group 3: Geopolitical and Competitive Considerations - The manufacturing segment holds significant geopolitical importance for both Intel and the US, which complicates the decision regarding separation [4]. - Protecting intellectual property (IP) from clients in the foundry business is crucial, necessitating a clear separation from the Intel Products business [9].

Key Points Company and Industry * **Company**: Intel Corporation (NASDAQ: INTC) * **Industry**: Semiconductor and Technology Core Views and Arguments * **Leadership Change**: Michelle Johnston Holthaus and David Zinsner have taken over as co-CEOs, emphasizing a focus on products and operational efficiency. * **Outsourced Silicon**: Intel plans to outsource more silicon in 2025 than 2024, with TSMC and Intel Foundry as potential partners. * **Intel Foundry**: The company is creating a subsidiary for Intel Foundry, with a separate operational board and ERP system. * **Product Development**: Intel is investing in new products and processes, including 18A, to regain market share and improve profitability. * **Altera and Mobileye**: Intel plans to sell a stake in Mobileye and engage with outside investors to take a stake in Altera. * **Cost Reduction**: Intel aims to reduce operating expenses and capital spending to improve profitability. * **AI PC**: Intel expects increased demand for AI PCs in 2025, driven by advancements in software and hardware ecosystems. * **ARM and AMD**: Intel acknowledges the challenges posed by ARM and AMD but remains confident in its x86 architecture and customer relationships. * **Data Center**: Intel plans to stabilize its data center market share loss and focus on building the right products to regain share. * **AI**: Intel is committed to investing in AI, with a focus on learning from its past experiences and iterating on its products. Other Important Points * **Process Technology**: Intel is investing heavily in process technology, with a focus on 18A and future generations. * **Customer Relationships**: Intel values its long-standing relationships with customers and aims to maintain and strengthen these relationships. * **Investor Transparency**: Intel aims to provide transparent communication with investors, focusing on meaningful milestones and achievements. * **Competitive Landscape**: Intel recognizes the competitive landscape in the semiconductor industry and is committed to staying ahead of the curve.

Company Overview - Intel Corporation is represented by Michelle Johnston Holthaus (Interim co-CEO) and David Zinsner (co-CEO, EVP, and CFO) at the Barclays 22nd Annual Global Technology Conference [1] - The discussion includes forward-looking statements and references to non-GAAP financial measures, with details available in Intel's recent filings [2] Leadership Transition - The company is undergoing a leadership transition with Michelle Johnston Holthaus and David Zinsner taking over as co-CEOs [5][6][7] - Michelle Johnston Holthaus highlights that while there will be some changes, the focus on building world-class products and maintaining strong market differentiation remains consistent [8] Strategic Focus - Intel continues to prioritize the development of world-class products and maintaining competitive boundaries in the market [8]