Chapter 1: What weak forecast did Intel provide for the upcoming quarter?
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Focusing once again on earnings and Intel certainly on that list as we see it bopping around in the aftermarket. What does that mean? We've got Intel shares down about 3.8% as we speak. And some of it has to do with a weak forecast, supply shortages, hampering sales. This is not a new story that we've heard around the chip companies. particularly when it comes to AI. The demand is there.
They can't meet the demand, which is kind of a good positive story that the demand is still there, but it's not great when you can't meet that, and you're just trying to kind of connect the dots there.
Chapter 2: How are manufacturing problems affecting Intel's performance?
Yeah, I want to bring in Ivan Feinseth, Research Director and Chief Investment Officer at Tiger's Financial Partners. The firm has more than $500 million invested under management. Uh, Ivan has a buy rating on the company's stock. Ivan does, does just very like your immediate knee jerk reaction to this. Does your, does your rating?
Well, I know you can't answer that question, but your knee jerk reaction, I'm not going to ask you your knee jerk reaction to the numbers here. You're shaking your head.
It's not this quarter. It's not a quarterly story. It is a major shift in the company. And they have, I think, turned a major corner. But the stock has also run up significantly from a low of $20. It hit $55. So I think it may have gotten a little bit ahead of itself and it may pull back. But I think everything that's going on under the new CEO, Lip Patan, is... is as planned.
I mean, they are well positioned to benefit from AI data center demand, AI computer demand, their partnership with Intel, money from the US government. So they are plenty flush to invest in all of their key growth initiatives.
So fundamentally, what's changed, Ivan, when it comes to this company? You obviously sound really upbeat. Is it just a case of having the backdrop because, you know, of the United States government? Is that what's done it? You know, kind of.
Well, it's everything.
Okay.
First of all, it's President Trump's push on what's sold here, is made here, investing in U.S. semiconductor manufacturing capacity here, expanding the Intel foundry business, as well as the growth of data centers, the growth of AI-enabled PCs. So they are positioned, I think,
perfectly to benefit from what was in the early innings of what was going to be a long game of the AI-driven growth in both the tech sector and the U.S. and the global economy.
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Chapter 3: What is Ivan Feinseth's immediate reaction to Intel's earnings report?
How does that change the dynamic?
It doesn't. But it's really funny that President Trump wanted to go from deporting the guy to giving the guy money.
Hey, that's the power of a conversation, right?
But it also shows how quickly things can change, certainly from the White House perspective.
Well, it highlights Trump's perspective on driving the U.S. manufacturing infrastructure. U.S. leadership in all key areas and semiconductors is a very important area, especially that Intel makes semiconductors for the defense industry.
Interesting. Okay. So does it make the defense business stronger?
Absolutely. Hey, there's no better partner. One, a number one partner. I don't, well, it could be a tie US government and Nvidia. Okay.
So let me, let me, let me ask this question a different way than Ivan. And that's about where Intel would be right now. If the US government had not made that investment, would this be a completely different picture? Would it have been a completely different quarter?
Well, yeah, I think this has helped. I think this removes concerns, balance sheet concerns, and allows the company and the CEO to focus on business. A partnership with NVIDIA is great, and a partnership with the US, it opens up doors. They're back working with Apple. They're going to be working with everybody.
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Chapter 4: What major shifts are occurring within Intel under its new CEO?
And then he goes on to say, making, or Intel says, the company making good progress in 14A production, on track for volume production in 2028, has multiple engineering engagements on 14A. Help me understand what that means.
These are different chips, the 14A, the 18A, and the announcements that they made earlier this month at the CES. They got their latest semiconductors on track to go into production to meet huge demand. Demand for all semiconductors is outstripping supply. There's, in fact, concerns of memory shortage and processor shortage. So they got the demand wind is a tailwind.
And they are back to innovating and developing and winning customers and working with key computer manufacturers, key hyperscaler cloud service providers. And I think that they got a tremendous tailwind. The stock ran up a lot. It went from 20 to 55. Even if it pulls back to 45, it's a buying opportunity because I think that long term, they are going to be back.
I mean, I don't think even be back to their former glory. I think they are going to be one of the world's. leading semiconductor developers, designers, and manufacturers.
So the Foundry Services Division, their factory unit, revenue of about $4.5 billion. It was a gain of about 3.8%, Ivan, from the year before. It currently relies on almost exclusively, as you know, Intel product divisions for orders. It's looking to expand beyond that. Is that crucial for the company's future growth?
It's crucial, but that is the opportunity. To work with everybody, because you've got to realize that most of the other semiconductor companies, even NVIDIA, Apple, all of the companies like Google, Facebook, Amazon that want their own processors, Qualcomm, they're all virtual manufacturers. They don't actually manufacture.
They outsource to companies like Taiwan Semiconductor and hopefully companies like Intel to manufacture their processors.
The U.S., at least from an investment perspective, things have kind of quieted down a little bit since this summer. But are there any other companies, particularly companies within your universe that you follow, that could see, in your view, an investment by the U.S. government?
You know, that I don't know. The other companies that I like in the semiconductor sector are NVIDIA and Qualcomm. And, you know, NVIDIA is pretty flush.
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Chapter 5: How is the U.S. government influencing Intel's growth strategy?
I was talking market caps, but it has to do with valuation. Intel now pricier than TSMC. Does that make sense?
Hmm.
Well, I always say I wish we could solve the mysteries of the stock market by dividing two numbers, like cash flow or even PE. Stocks go up for everything that you really can't measure. And this is about Intel's future. So we are going to see, if all goes well, a huge ramp up in revenue. in expansion in margin, an increase in cash flow, and then an increase in profitability.
So I think their foundry business will ramp up significantly. And as their new processors come to market, revenue and cash flow and profitability will also ramp up significantly.
Yeah, Liputan saying, you know, Intel faces an execution challenge. We are laser focused as a team to improve that. To be candid, it's just our execution that needs to improve. Ivan Feinseth, great stuff as always. So appreciate it. He's, of course, Chief Investment Officer over at Tigris Financial Partners joining us on Intel.
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