Skip to Content
Stock Analyst Update

Intel Overcomes Industry Headwinds With Record Results

We reiterate our view that shares look attractive at current levels for the wide-moat firm.

Mentioned:

Intel (INTC) reported third-quarter results significantly ahead of its guidance, driven by broad-based outperformance in the firm’s data-centric segments. Despite a host of issues marring the semiconductor industry, the firm increased its 2019 revenue guidance to $71 billion from $69.5 billion noted last quarter. We continue to anticipate competitive challenges to impact Intel’s server and desktop CPU strongholds over the next few quarters, as AMD launches numerous products on TSMC’s 7-nanometer process technology. However, we believe Intel has been adroitly navigating the headwinds, via concerted efforts to reign in spending while investing in critical process and design technologies (10- and 7-nm, 5G, Artificial Intelligence, and automotive). Intel’s board also increased the share buyback authorization, with management expecting to repurchase $20 billion in shares over the next 15 to 18 months. Shares were up during after-hours trading, though they continue to trade in 4-star territory relative to our unchanged $65 fair value estimate. We reiterate our view that shares look attractive at current levels for wide-moat Intel.

Intel’s third-quarter revenue was $19.2 billion, which was flat year over year but $1.2 billion higher than management’s guidance. Although PC-centric revenue was down 5% year over year, data-centric sales grew 6%. PC volumes were down 10% year over year, which we partially attribute to the ongoing shortages Intel has been facing as well as competition from AMD (particularly in desktops). However, Intel partially offset this weakness with ASP strength, as notebook and desktop ASPs grew 4% and 3%, respectively. Eighteen PC systems (all laptops) powered by Intel’s 10-nm Ice Lake processors have shipped to date, with 30 total designs to be launched this year. Data center group, or DCG, sales grew 4% year over year, as cloud returned to growth after a few quarters of inventory digestion.


Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Abhinav Davuluri does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.