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Intel: A value investment or a value trap?

01

The economic slump has switched consumers' focus from technology to basics, hurting semiconductor companies. Food, clothing, and shelter become crucial during high inflationary periods, when mortgage rates are at their highest since 2008.

03

Intel stock is down 47% year to date, double the S&P 500's drop. Intel's Zacks Subindustry is down -48% YTD, and AMD is down -52%.

04

The price-performance chart shows AMD overtaking Intel in PC and server CPUs. AMD eclipsed Intel in market cap during the second quarter, raising concerns that Intel is a value trap.

05

AMD passed Intel in market cap after Intel's weak second-quarter earnings. INTC's second-quarter earnings of $0.29 below forecasts by 58%. This was a 78% drop from Q2 2021, with GAAP revenue down 22%.

06

Zacks forecasts third-quarter earnings of $0.34 per share, down 80% from the year before. Third-quarter sales are expected to drop 19% to $15.57 billion.

07

INTC's annual earnings are forecast to plummet 59% in 2022, then grow 16% in FY23. Sales are predicted to climb 3% to $68.23 billion in FY23, but will drop 15% this year.

08

Intel's Client Computing, Datacenter, and AI Groups were affected by poor market circumstances in its second-quarter results report. Network, Edge Group, and Mobileye reported record quarterly sales.

09

CEO Pat Gelsinger said second-quarter earnings were below company standards and Intel must perform better for shareholders. Intel announced its 13th-Gen CPU and expanded its developer cloud to compete with AMD and Nvidia.

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