Chapter 1: What are the latest developments with Intel's stock performance?
The big news, of course, is Intel. Intel is absolutely ripping. Intel jumped 20% after hours on the back of $13.6 billion in Q1 revenue, only 11% above analyst estimates. But there's five key factors that are coming together to create a new narrative around Intel that are driving the stock much higher. And it is almost an all-time highest.
The main factor is Bubble Boy on X.
A lot of people have called this, and it is long overdue. The revenue is only up 7% year over year, but next quarter is already guiding to be better, somewhere north of $14 billion, probably. But there's still big losses under the hood. This quarter, they lost $3.7 billion. Not good, but that was mostly driven by one-off charges related to Mobileye and derivative payments tied to the U.S.
government's 10% stake. So if you strip those out, Intel actually earned $1.5 billion, which is much better than what people were expecting, which was basically breakeven. So the cruise ship of Intel is starting to turn somewhat, but the narrative has already completely shifted.
Chapter 2: What factors are driving Intel's stock price increase?
So Intel is working again is the idea. The AI trade has mostly been NVIDIA. NVIDIA's memory suppliers, TSMC, power equipment, Cloud CapEx, and a few software names that can prove real adoption. If you're accelerating your top line, you are an AI winner. That's sort of the rule of thumb. Of course, things might play out differently, but that's what's been happening in the market.
Intel was the most embarrassing missing piece. Why isn't Intel booming when we're in a computing boom? It made no sense, but there were good reasons, and we'll go through them. The company that invented the modern CPU era, they missed mobile, they fell behind TSMC, they failed to produce a competitive AI GPU.
They did fab a GPU at one point, they tried to get into gaming at one point, but they never really found traction, especially in the data center and the servers for AI training, and so they have fallen behind. And then they spent the last few years trying to convince the world that Intel could still matter. But now, oddly enough, the rise of AI agents, it's giving Intel a second shot.
Do you have thoughts on Intel yet? I'm going to keep going.
It's funny, because at the moment that the US took a position in Intel, it felt like it was a bailout, right?
It felt like that, yeah.
And it felt like you would expect, OK, over time, this is going to be very, very good for Intel to have that vote of confidence. But I don't think anyone was really predicting that it would go up quite this much in the span of just half a year.
I think Ben Thompson wrote a pretty strong bull case for the Intel US deal. Basically, you had to grapple with this idea of this doesn't feel like free market capitalism.
Yeah, I guess the only thing is there wasn't this narrative around CPUs at the time that the deal was happening, or at least it wasn't a very public narrative.
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Chapter 3: How is AI impacting Intel's business strategy?
No, that makes sense. There were some predictions from AI 2027 and other folks in the AI forecasting world around the rise of agents that agents would arrive at this time. I didn't see too many predictions. folks who are predicting strong, valuable, effective AI agents really predicting the CPU crunch, but that's exactly what's happened. So AI agents need CPUs to do things.
Training frontier models, that's still a GPU story, but running agentic workflows across data centers, orchestrating tasks, routing jobs, managing memory. Handling inference workloads, coordinating servers increases demand for the boring old central processor. Intel's data center segment produced $5.1 billion in quarterly revenue, beating the $4.5 billion that analysts expected.
And Intel CEO Lip Bhutan said, the next wave of AI is moving from foundational models to inference to agentic AI, and that shift increases the need for Intel CPUs, wafers, and advanced packaging. On the earnings call, he said, that the CPU to GPU ratio is closer to one CPU for every four GPUs versus one for every eight in prior years.
And there was an interesting forecast from Liputan as well, but VK Macro says, CPU to GPU ratio flipping from one to eight to eight to one is absolutely wild. That's just a completely new world to what we've had so far. This is from Evercore, ISI's Mark Lapesis, has upgraded Intel directly from neutral to outperform and mentions that
As AI workloads shift further toward inference and agents, the weight of CPU demand will rise sharply, and the CPU to GPU ratio could flip from 1.1 to 8 to 8 to 1, which is a massive, massive switch.
Yeah, I mean, I don't know, like, that's kind of a crazy ratio. It is. Because, like, the lesson from tier models is that, like, the models are going to keep getting bigger. You're going to need way more, like, chips to implement them. Like, Dylan Patel was on, Patrick O'Shaughnessy, I think it came out yesterday or the day before.
And he's just saying, like, you know, the models are going to get really expensive. Tokens are going to get super, super expensive. People are going to price down. So I don't know if I fully believe the narrative that, like, you need all the CPUs. You're going to need way more CPUs than CPUs.
Well, I mean, the... That's all, folks. It really lines up perfectly. His camera is the main one that fits perfectly. The glasses land right on.
I love a Friday show.
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Chapter 4: What are the implications of the US government's stake in Intel?
companies that are getting into the CPU design space. We talked about Arm recently. And Arm, of course, it feels like they will be going with TSMC in the short term, but who knows what happens in the long term. So as CPUs continue to be important in the AI story, all good news for Intel.
So suddenly investors are more willing to entertain a messy, expensive, strategic chip story than they were five years ago. Intel famously missed mobile, which meant TSMC ran away with enormous manufacturing volume and left Intel with a demand problem. Volume was destiny, as they say.
You can't grow if you can't build the fab that's on the leading edge and you can't build the fab unless you actually have the customers. And so if you missed mobile, you just have this gap and you have to jump over it with the help of the government and a bunch of other people and the AI narrative and all these different five key pieces.
So the pieces of the puzzle are coming together now and that's good for Intel. It's also good for America's chip manufacturing prospects. So good news overall and congrats to all the Intel shareholders that were believers early on and rode the wave.
Every US citizen.
Every US citizen. Congrats to all Americans. Every US citizen. And every US debt holder. So even the international folks that own treasuries are in a better financial position today.
You've got to think about what this does to Trump's confidence level. You know, he's like... I enjoy a bailout. He's like, I'll indulge Spirit Airlines, American Spirit. I think he's excited about the potential there. But why stop at just bailouts? Why not start taking a position in hyperscalers? He's like, look, I think I can move your market cap by 3x. I've done it before. Yeah.
Intel was falling apart. Yeah. Imagine if he applied all his wisdom to a company already winning.
Certainly possible. Jim Cramer's excited about it. He said in 13 months, Lip Bouton took Intel from a possible and unthinkable bailout candidate to one of the wealthiest companies in the chip industry. There is a big three of CPU, AMD, Intel, and ARM. and the agents need far more CPUs than these three can produce, so that means prices are going up, and they got the god candle.
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Chapter 5: How are AI agents changing the demand for CPUs?
It's one big circle. Yes, it's one giant circle of life that is actually self-perpetuating because it is a true economy that hits 25 different categories. Well, you might think it's over, but Elad Gil does not. He says, my view is the AI boom will only accelerate and is a once-in-a-lifetime transformation.
This is orthogonal to whether many AI companies should exit in the next 12 to 18 months, as some may lack durability versus labs, new entrants, or weird market shifts. But he's extremely bullish. He also posted a funny thing about his new life plan. He said his new life plan is to move to Brooklyn, get a neck tat, ride a bike everywhere, cold brew his own coffee, also start drinking coffee.
That's an odd thing to jump straight to the.
Was this was was was he's like trying to is this like a cipher of some sort?
Is there a secret?
Is there a secret message embedded in this post? Maybe. It sounds like he's advising his portfolio companies. Yes. I don't care how hard you're ripping. Yeah. A lot of you should probably exit. Yeah. Just given how much uncertainty there is.
Well, later in the show, we have a fun story. A bear wandered into a backyard and took a dip in the family pool. We'll take you through it. Coming up after, later in the show, what this tells us about edge computing. Get ready for it.
Has Jane Street achieved AGI internally? I think so. They definitely have. They did $40 billion in revenue last year, more than all the big Wall Street banks and with only 3,500 employees.
Yes, let's give it up for Jane Street. Fantastic. We have some exciting news out of Thrive Capital. Josh Kushner announced a new fund, Thrive Eternal, a permanent capital holding company that will be concentrated in a small number of assets that we can own and steward over many decades across Thrive Capital and Thrive Holdings.
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