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Intel Corp INTC

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Intel Delivers Record Q4 Results Thanks to PC Strength; No Update to Outsourcing Plans

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Intel reported fourth-quarter results that significantly exceeded its guidance, primarily due to stronger than expected PC demand related to the ongoing work- and learn-from-home trends stemming from COVID-19. Due to the impending CEO transition from Bob Swan to Pat Gelsinger (effective Feb. 15), management did not elaborate on its outsourcing plans or provide full-year guidance. We view this decision as prudent, as it will allow Gelsinger some time to assess the current state of affairs for Intel’s 7-nanometer process technology before the firm’s April earnings call. One key point offered by Gelsinger was that he expects the majority of products sold by Intel in 2023 to still be manufactured internally. Shares of wide-moat Intel were down nearly 5% after hours, which we attribute to the aforementioned lack of clarity on outsourcing. That said, shares are up 41% from late October lows and are trading at a more modest discount to our unchanged fair value estimate of $65 per share.

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Company Profile

Business Description

Intel is one of the world's largest chipmakers. It designs and manufactures microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors. It was the prime proponent of Moore's law for advances in semiconductor manufacturing, though the firm has recently faced manufacturing delays. While Intel's server processor business has benefited from the shift to the cloud, the firm has also been expanding into new adjacencies as the personal computer market has declined. These include areas such as the Internet of Things, memory, artificial intelligence, and automotive. Intel has been active on the merger and acquisitions front, acquiring Altera, Mobileye, Movidius, and Habana Labs in order to assist its efforts in non-PC arenas.

2200 Mission College Boulevard
Santa Clara, CA, 95054-1549
T +1 408 765-8080
Sector Technology
Industry Semiconductors
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 28, 2020
Stock Type High Yield
Employees 110,600