Intel Earnings: Maintaining $40 Fair Value Estimate as Near-Term Outlook Disappoints the Market

Intel's fourth-quarter results were modestly ahead of our expectations but provided investors with a soft first-quarter forecast, with stronger-than-usual seasonal headwinds and inventory corrections in some noncore businesses. With Intel’s stock up 45% in the past three months—versus a 15% rise in the Morningstar Global Markets Index— we suspect that investors were seeking a brighter outlook, particularly in Intel’s foundry business and artificial intelligence accelerator pipeline, and we’re not too stunned to see shares fall as much as 10% after hours. We keep our $40 fair value estimate for no-moat Intel and still do not see an attractive margin of safety for investors today.