Intel is working on a turnaround plan to regain leadership in technology by 2030.
From Nasdaq: 2024-07-22 04:30:00
Intel has struggled in 2024, down 34% while the semiconductor sector ETFs are up 42%. CEO Pat Gelsinger’s turnaround plan aims to make Intel a technology leader again by 2030. The plan involves opening up the internal fab to external customers to compete with Taiwan Semiconductor, with the goal of breaking even by 2027 and reaching a 30% operating margin by 2030. The stock could be very cheap if Intel meets its 2030 goals.
Intel’s turnaround plan focuses on regaining manufacturing leadership through investment in chip design and success in chip production. The company has secured funding from the U.S. government and attracted investments from big-name investors. Microsoft has announced it will be a customer for Intel’s upcoming 18A node, with the goal of matching TSMC’s capabilities by the fifth node of the four-year plan. Intel has also brought its Intel 3 node into mass production on schedule.
Intel’s 2030 financial model separates the internal foundry from its in-house designed chips. The Foundry segment currently shows a massive loss, but Intel has already booked $15 billion in revenue from third parties as of April. The company aims to break even in the Foundry segment by 2027 and achieve a target 30% operating margin by 2030. Intel’s Products segment is forecasted to reach a 40% operating margin, leading to a 35%-40% overall operating margin by 2030 with a revenue target of around $100 billion.
If Intel can meet its 2030 targets, the stock could be very cheap compared to its potential operating income. With the stock currently trading at a market cap of $140 billion, the potential future operating income of $35-40 billion in 2030 would make it less than four times its operating income. The execution of the turnaround plan and economic conditions will be key factors in determining the stock’s future performance. It may be worth considering as an investment opportunity for those looking for exposure to AI and technology.
Read more at Nasdaq: Where Will Intel Be in 7 Years?