Intel's Speculative Foundry Bet: Government Backing Versus Financial Fundamentals

Key Quotes

"Sometimes you see a stock start to move up before the fundamentals get there, and with Intel, you see that. 2025 will be the fourth consecutive year of declining revenue. Intel's still not profitable on a reported basis. It's not generating positive free cash flow, something that analysts don't see changing until 2027."

Rick Munarriz highlights that Intel's stock price appreciation may be outpacing its current financial performance. Munarriz points out that the company is projected to have declining revenue for the fourth consecutive year in 2025 and is not yet profitable or generating positive free cash flow, with these metrics not expected to improve until 2027.

"The US ceded its most advanced chip-making capabilities to Taiwan years ago. Intel itself was the manufacturer at scale of our best technology when it came to chips and really just got off track in so many different ways. So this represents a comeback for Intel. If you ever hear that Intel's a comeback story, this is part and parcel of that."

Asit Sharma explains that Intel's current efforts to develop advanced chip-making capabilities in the U.S. signify a potential resurgence for the company. Sharma notes that the U.S. previously lost its leading position in advanced chip manufacturing to Taiwan, and Intel was once a primary producer of cutting-edge technology, suggesting that these new initiatives are central to Intel's narrative of a comeback.

"The 18A, not only just what we're talking about gaming, but also AI, but also gaming and more power efficiency, these things are a matter. And so they're making a splash in here. It'll take a while to catch up with the Nvidias and the AMDs of the world in many ways, but I'm excited about all that. But again, I'm happy with my 60 that I have, my share, as indirectly through being. I'm not so excited to jump on the stock now because it has run up so much, and even looking at next year, it's not like investors are expecting it will be a return to growth and a return to profitability, but it's just a very small step, not moving the needle yet."

Rick Munarriz expresses excitement about Intel's potential in areas like AI and power efficiency with its 18A technology, acknowledging it will take time to compete with established players like Nvidia and AMD. Munarriz indicates he is content with his current indirect holdings and is not eager to invest more at the current stock price due to its significant run-up, noting that investor expectations for next year do not yet show a substantial return to growth or profitability.

"I have a few passions outside of investing, Tim. I love to read, I like to write some fiction, I love to learn languages. But I'm not going to lie either. I mean, the three of us have chosen this as our profession, so we're pretty wired in all the time. And I think if I don't take that conscious break to chase my passions, it could easily be something that I don't turn off."

Asit Sharma describes his methods for disconnecting from the constant engagement with the financial markets. Sharma mentions his passions for reading, writing fiction, and learning languages as ways to consciously step away from his profession, recognizing that without these deliberate breaks, the demands of his work could become all-consuming.

"The greatest benefit, I think, taking a break from the market is perspective. Removing yourself from the daily grind of news, stock movements, and more can help you to reframe your portfolio as a loose collection of businesses with plans and purposes you may or may not believe in and like following."

Tim Beyers posits that the primary advantage of taking a break from market activities is gaining perspective. Beyers explains that stepping away from the constant influx of financial news and stock fluctuations allows investors to re-evaluate their portfolios, viewing them as collections of businesses with distinct objectives, which can lead to a more informed and less reactive approach.