On Sunday, reports emerged that both Broadcom and TSMC are exploring potential deals to break up Intel Corporation. This speculation has been circulating for some time, and not long ago, there were even rumors of Qualcomm and Elon Musk considering an acquisition of the struggling chip giant.
Broadcom has been closely analyzing Intel’s chip design and marketing divisions, and there were indications that it might make a bid—on the condition that a partner could be secured for Intel’s manufacturing division. Meanwhile, TSMC, the world’s largest contract chipmaker, has separately shown interest in acquiring or taking control of some of Intel’s chip plants, potentially as part of an investor consortium or another structured deal.
Currently, discussions remain informal, with no indication that Broadcom and TSMC are working together. However, Intel’s stock surged by approximately 10% today following this news, reflecting growing investor interest. Whether it’s Broadcom or TSMC, the likelihood of Intel being split up appears increasingly plausible. Additionally, another potential bidder, WCOM, has reportedly entered the picture.
As a result, analysts have begun raising their price targets for Intel, with some now projecting levels near $30. The probability of a corporate breakup is seen as significantly higher than in recent months, a factor investors should take seriously. Despite today’s stock rally, Intel has been struggling—down 47% over the past year and 31% over the last decade. The company’s 10-year high reached approximately $69 four years ago, but even with this recent surge, shares remain near the lower end of their 52-week range.
Three major analysts—SEI Alpha, Wall Street, and Quan—currently rate Intel as a "hold." Other recent developments have also impacted the company’s performance. Notably, former CEO Pat Gelsinger was ousted by the board following an extended period of declining share prices. Additionally, Intel recently issued weak forward guidance, though its latest earnings report slightly outperformed expectations. The company posted earnings per share (EPS) of $0.13, exceeding the forecasted $0.12, and revenue of $14.26 billion, surpassing the expected $13.81 billion. However, Intel reported a net loss of $126 million for the quarter, compared to a net income of $2.67 billion in the same quarter last year.
Given these factors, the key question is whether Intel is now a viable addition to investment portfolios. What are its long-term growth prospects, and what do the underlying financial metrics reveal? Examining its performance over the past four quarters, Intel has exceeded expectations in two, giving it a 50% track record. Based on an estimated EPS of $0.49 for December 2025, the company is currently trading at a forward valuation of 48.54.
For context, this valuation receives a C- grade, as the sector average stands at 25. This means investors are paying a 92% premium compared to the sector and a 75% premium relative to Intel’s five-year average of 28—a factor that could deter many potential investors. However, depending on other valuation metrics, further analysis is necessary to determine its investment potential.
Whichever valuation metric you prioritize in your investment thesis, some indicators suggest that Intel presents a compelling buying opportunity at a significant discount. The stock looks attractive when evaluated through price-to-book, price-to-sales, and price-to-cash-flow ratios. However, we'd love to hear your thoughts—perhaps you prefer other valuation methods or a combination of multiple factors.
Regarding Intel’s growth prospects, it’s no surprise to long-time followers of the company that it has received an "F" rating. Year-over-year, growth is down 2%, compared to the sector’s 5.2%. Looking forward, Intel expects 2% growth, while the sector is projected at 6%, meaning it lags behind in both cases. However, when examining earnings-per-share (EPS) growth over the next 3 to 5 years, Intel forecasts 14% growth—slightly below the sector's 15% but an improvement over its five-year average of 9.4%.
From a profitability standpoint, Intel scores a B+. Its gross margin sits at 34%, significantly lower than both the sector average of 51% and its own five-year average of 49%. The net profit margin is 35%, but given the recent quarterly net loss, this figure is misleading. Comparatively, the sector posts a modest 4% net profit margin, while Intel’s own five-year average stands at a much healthier 15%.
In terms of cash generation, Intel remains strong, producing $8.3 billion from operations—far above the sector's $103 million. Historically, the company has generated an even higher five-year average of $23 billion. However, free cash flow trends are concerning, as the company has struggled with consistent growth in this area over the last three years, and projections for the next four months indicate continued decline.
Sales growth is another weak point. The past three years have shown negative revenue growth, and over the last decade, four of those years reported declines. Looking at the top-line figures, Intel’s revenue in 2015 stood at $55 billion—higher than its 2024 revenue of $53 billion. When adjusted for inflation, the gap becomes even more significant.
Regarding share repurchases, Intel has historically returned excess cash to shareholders. However, between 2021 and the latest quarter, it has taken the opposite approach and begun diluting shareholders’ positions.
Return on invested capital (ROIC) is another key metric, with 10% or higher being a strong indicator of effective capital allocation. Intel performed well from 2015 to 2021, but in recent years, ROIC has plummeted, hitting -2% in 2024—confirming its reported net loss. Similarly, operating margins and free cash flow followed the same trend, remaining strong up until 2021 before experiencing a sharp decline.
Some investors may view Intel as a potential turnaround play. However, its net debt-to-EBITDA ratio currently stands at 2.64—significantly above the preferred semiconductor industry benchmark of 1.5. The good news is that over the next 12 months, this figure is expected to decline to around 2, though it still exceeds the ideal threshold. This metric is crucial as it indicates how many years it would take for Intel to repay its debt using available cash.
Institutional investors hold around 65% ownership of Intel, with $7 billion in sales over the last 12 months. Interestingly, institutions have been increasing their stake in the company—more than doubling their purchases in Q4 compared to previous quarters. This suggests that Wall Street remains bullish on Intel’s prospects. However, insider ownership remains notably low at just 0.04%.
Looking at the latest quarter, there were no insider stock purchases or sales. However, in Q4, approximately 650,000 shares were sold. For full transparency, we always highlight insider transactions, but it's important to remember that insider selling is not necessarily a bearish signal—executives may sell for various personal or financial reasons. Notably, on November 7th, the Executive Vice President sold around 25,000 shares, netting approximately $650,000.
That said, always conduct your own due diligence and avoid blindly following insider or institutional trading activity.
When comparing Intel to other semiconductor companies of similar size—such as Analog Devices and Micron Technology—its performance stands out negatively. Over the past year, Intel’s stock has declined by 46%, making it one of the few in the industry to post a negative return during that period. Over the past five years, it has also delivered negative returns, making it the worst-performing company among its peers. Keep in mind that Intel was previously a dividend-paying stock, and this total return calculation includes reinvested dividends. Even with dividends factored in, its 10-year performance remains disappointing, with a total return of -5%.
Of course, past performance is not an indicator of future results. However, it's important to recognize that Intel has under performed the S&P 500 over the last year, the last five years, and the last 10 years. This is a critical consideration because when investing in individual stocks, the goal is to select companies that can outperform the broader market over a long-term horizon—whether that be 5, 10, 15, or 20 years.
Next, examining the income statement, we see that Intel’s revenue has been highly inconsistent over the past decade. More concerning is its bottom-line performance, which also shows volatility. In 2024, Intel reported a net loss of $19 billion, a significant red flag for both current investors and those considering adding the stock to their portfolios.
Moving on to the balance sheet, a quick financial health check reveals inconsistencies in Intel’s cash reserves. The company’s cash holdings have declined slightly, from $25 billion in 2015 to $22 billion today. However, when evaluating cash reserves, it’s crucial to compare them with total debt. In this regard, Intel’s financial position has worsened, as total debt has more than doubled—from $23 billion in 2015 to $51 billion currently—continuing to rise year after year. While this doesn’t necessarily mean Intel is uninvestable, it’s a key risk factor that investors should be aware of.
Finally, looking at cash flow from operations, Intel has experienced a noticeable decline since 2020. A decade ago, it generated approximately $19 billion in operational cash flow; today, that figure has been nearly cut in half, sitting at just $8.3 billion. However, it's worth noting that Intel recently secured an $8 billion grant under the CHIPS Act, which may provide some financial relief moving forward.
This was something we had anticipated would significantly benefit the company, especially with Donald Trump now as president and his push to bring more manufacturing back to the U.S. However, the actual impact remains uncertain, particularly if Intel were to be split up.
Now, moving on to our intrinsic valuation, our discounted cash flow (DCF) model calculates a fair value of $27 per share. Here's how we arrived at that figure:
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We factored in year-over-year free cash flow,
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Accounted for historical average growth, though it is skewed due to negative periods,
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Applied three different growth rates—low, medium, and high—to project future cash flows.
Since these numbers are subjective, you can download a copy of this model using the pinned comment below and input your own figures—whether for Intel or any other stock.
Under our most conservative scenario, assuming 0% growth, the calculated fair value remains $27, representing an 8% upside from current levels. For transparency, here are the estimates at different growth rates:
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4% growth: $36 per share (46% upside)
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8% growth: $48 per share (94% upside, nearly a 2x increase)
Given Intel’s recent struggles, we are taking a cautious approach today. However, even at 0% growth, applying a 10% margin of safety (MOS), the stock is trading close to fair value. That means, at current prices, you could argue there is already a 10% MOS baked in.
Wall Street analysts, as we saw earlier, maintain a "Hold" rating, with an average price target of $26, implying just a 4% upside over the next year. For those who believe Intel should trade higher, here’s how it looks with different margin of safety levels:
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At 4% growth, a 10% MOS suggests a buy price of $33
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At current prices, a 4% growth expectation implies a 30% MOS
However, despite these calculations, Wall Street analysts only forecast a 4% upside over the next year.
We’d love to hear your thoughts—is Intel a buy, hold, or sell? Does this news impact your investment decision? Let us know in the comments below.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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