Intel: Hefty Investments and Recent Losses Lead Us to Downgrade Our Moat Rating to None

We downgrade our economic moat rating for Intel to none from narrow, while retaining our $35 fair value estimate. Our moat downgrade comes from the deterioration in Intel’s returns on invested capital in recent years, and we do not foresee the company generating excess returns on capital for the next few years, either. This considers the firm’s manufacturing struggles and hefty investment into new manufacturing processes (even when considering a host of government incentives).