Bernstein on Intel stock: ‘No real reason to be here until 2030’ By Investing.com

Bernstein analysts said on Friday that their primary takeaway from Intel’s (INTC) foundry segmentation event was “No real reason to be here until 2030.”

The chipmaker’s shares dropped by roughly 8% since the company’s disclosure of its semiconductor manufacturing arm’s financial performance in its semiconductor manufacturing business, also called the foundry segment.

Specifically, the foundry posted a $7 billion operating loss in 2023, against revenues of $18.9 billion. This loss marks an increase from the $5.2 billion loss recorded in 2022, with sales previously at $27.5 billion.

“After all, the fact that foundry economics have been awful is not (or should not have been) a huge surprise; in fact the company directly suggested this back in June,” analysts said.

“That being said, the idea that things are still getting worse in 2024 might have been taken somewhat poorly; if anything, the idea that a -37% operating margin and $7B loss do not yet represent a trough is somewhat breathtaking especially given all the cost cuts the company was supposedly implementing last year.”

Bernstein acknowledges the potential for improvement in Intel (NASDAQ:)’s foundry business, noting its significant loss last year and the optimistic forecast for a 25-30% operating margin by 2030.

However, analysts expressed caution, suggesting that it may be a long ride for INTC “even if one is fully signed up to the (seemingly aggressive) targets.”

They highlighted that achieving break-even may not be feasible until after 2027, and the ambitious 2030 targets remain speculative, hinging on optimal progress, “which remains a wide
open debate.”

Bernstein analysts said on Friday that their primary takeaway from Intel’s (INTC) foundry segmentation event was “No real reason to be here until 2030.”

The chipmaker’s shares dropped by roughly 8% since the company’s disclosure of its semiconductor manufacturing arm’s financial performance in its semiconductor manufacturing business, also called the foundry segment.

Specifically, the foundry posted a $7 billion operating loss in 2023, against revenues of $18.9 billion. This loss marks an increase from the $5.2 billion loss recorded in 2022, with sales previously at $27.5 billion.

“After all, the fact that foundry economics have been awful is not (or should not have been) a huge surprise; in fact the company directly suggested this back in June,” analysts said.

“That being said, the idea that things are still getting worse in 2024 might have been taken somewhat poorly; if anything, the idea that a -37% operating margin and $7B loss do not yet represent a trough is somewhat breathtaking especially given all the cost cuts the company was supposedly implementing last year.”

Bernstein acknowledges the potential for improvement in Intel (NASDAQ:)’s foundry business, noting its significant loss last year and the optimistic forecast for a 25-30% operating margin by 2030.

However, analysts expressed caution, suggesting that it may be a long ride for INTC “even if one is fully signed up to the (seemingly aggressive) targets.”

They highlighted that achieving break-even may not be feasible until after 2027, and the ambitious 2030 targets remain speculative, hinging on optimal progress, “which remains a wide
open debate.”