To The Moon

$Intel(INTC)$

With Intel Corporation scheduled to report its quarterly earnings after markets close on July 24, 2025, investor sentiment remains divided over the stock’s near-term prospects. The once-dominant chipmaker has struggled to find its footing in a rapidly evolving semiconductor landscape, marked by intensifying competition, generational technology shifts, and mounting geopolitical headwinds.

Yet, with the stock trading well below its historical averages and showing signs of operational stabilization, some value-oriented investors are starting to take notice. Should you consider buying Intel ahead of its earnings report — or would it be wiser to wait for greater clarity?

In this in-depth analysis, we’ll examine Intel’s recent performance, ongoing challenges, turnaround initiatives, and my own valuation assessment to help investors make an informed decision.

A New CEO, But Old Problems Persist

Intel has undergone significant leadership changes over the past year. Former CEO Pat Gelsinger, once hailed for his ambition to revitalize Intel’s manufacturing dominance, was forced out after his ambitious foundry strategy failed to deliver meaningful results. The new CEO, less than a year into the role, has publicly acknowledged the depth of the company’s challenges, characterizing the most recent quarter as “a step in the right direction,” while cautioning that “there are no quick fixes.”

That blunt assessment reflects the reality that Intel remains in a precarious competitive position. While once the undisputed leader in CPU-based server chips, Intel has been hemorrhaging market share in the critical data center segment — a market that is growing rapidly as enterprises pivot toward artificial intelligence. AI workloads favor GPUs over CPUs, and here Nvidia has emerged as the dominant player, capturing significant share at Intel’s expense.

A Tumultuous Macro Backdrop

Adding to its internal struggles, Intel now faces a challenging external environment. The semiconductor industry as a whole is grappling with softening demand after years of pandemic-driven overinvestment, as well as heightened global uncertainty fueled by U.S.-China trade tensions and tariffs introduced earlier this year.

Intel, already on the back foot before these headwinds emerged, now finds itself having to navigate geopolitical risks on top of its operational and competitive issues. As Intel’s CFO acknowledged in the company’s most recent earnings call, the “current macro environment is creating elevated uncertainty across the industry,” and Intel is no exception.

Why I Still Rate Intel a Buy — But With High Risk

Despite this litany of challenges, I’ve maintained a “Buy” rating on Intel throughout 2025. This may seem counterintuitive, but the rationale is simple: valuation.

Intel’s stock has fallen so sharply that its current price arguably underestimates the company’s long-term earnings potential, even factoring in significant headwinds. My proprietary discounted cash flow (DCF) analysis suggests a fair value of $32.53 per share, compared to a market price of about $23 — indicating meaningful upside for long-term investors willing to stomach the risks.

That said, Intel is not a stock for the faint of heart. The company is operating in an extremely competitive market, its new product launches have yet to demonstrate decisive traction, and geopolitical uncertainty could create further volatility. For risk-averse investors, this may not be the right time to buy.

Cost-Cutting and Restructuring: Necessary But Not Sufficient

Intel’s leadership recognizes the need to align costs with declining revenue and demand. To that end, the company has implemented aggressive cost-cutting initiatives, reducing its 2025 non-GAAP operating expense target to approximately $17 billion, with further reductions to $16 billion planned for 2026.

Capital expenditures have also been trimmed, from a planned $20 billion to $18 billion for 2025. That represents roughly a 10% reduction, reflecting management’s acknowledgment that its aggressive manufacturing build-out strategy has not yet paid off.

Indeed, former CEO Gelsinger’s big bet was to transform Intel into a global foundry player, offering manufacturing capacity not only for its own chips but also for third-party customers like AMD, Nvidia, and others. The logic was sound: with growing concerns about supply chain concentration in Taiwan, U.S.-based manufacturing should theoretically attract customers. But so far, demand for Intel’s manufacturing services has been disappointing, largely because its own technology roadmap and execution have lagged competitors.

Product Launches Under Scrutiny

For Intel to regain its footing, the company must show it can deliver products that customers actually want — at competitive performance and cost.

In February 2025, Intel launched its Xeon 6 processors with performance cores, aimed at the data center and AI markets. This launch represents one of Intel’s best chances to regain share in a growing segment. Investors will be watching closely for any signs that Xeon 6 is gaining traction, as previous launches — including the much-touted Gaudi GPU — failed to meet expectations.

Intel needs a win in the data center space, where growth is strong and margins are attractive. Merely stabilizing market share in this segment, rather than continuing to lose ground, would be a significant step forward.

Cash Flow Still Under Pressure

Financially, Intel’s situation remains tight. In the first quarter of 2025, the company generated $12.7 billion in revenue, flat year-over-year. Thanks to cost-cutting, operating margins improved modestly. Importantly, operating cash flow turned positive, at $800 million, compared to a loss of $1.2 billion in the same quarter last year.

However, the company’s capital expenditures remain massive — $5.2 billion in Q1 alone — leaving Intel deep in negative free cash flow territory. This imbalance has persisted for several years, reflecting the heavy investment required to modernize and expand its manufacturing capabilities.

Until Intel can either grow its operating cash flow meaningfully or scale back capital expenditures even further, free cash flow will remain a concern.

What to Watch in This Quarter’s Earnings

As we look ahead to Intel’s July 24 earnings report, here are the key areas investors should focus on:

• Revenue Trends: Intel has guided to Q2 revenue of about $11.8 billion, a sequential decline from Q1. Any improvement on this guidance would be a positive surprise.

• Market Share Metrics: Clarity on whether Intel is holding or losing ground in critical segments like data center and AI will be crucial.

• Product Demand: Updates on Xeon 6 and other recent launches will indicate whether Intel’s product roadmap is finally resonating with customers.

• Cash Flow and Spending Discipline: Evidence that Intel is reining in capex while maintaining operational improvements would signal a more sustainable path forward.

Should You Buy Before Earnings? My Recommendation

The big question: should you buy Intel stock before earnings?

Even though my valuation work suggests Intel is undervalued, I do not recommend initiating a position before earnings. Why? Because the company already carries significant strategic and operational risk, and earnings announcements add another layer of uncertainty.

If earnings disappoint, Intel’s stock could fall further, potentially creating an even better buying opportunity. Conversely, if the stock jumps on strong results, it may move closer to fair value — but given the company’s persistent challenges, I would not regret missing out on a short-term rally.

In my view, waiting for more information post-earnings is the more prudent approach. For long-term investors already holding Intel, maintaining your position through earnings is reasonable.

Key Takeaways for Investors

Intel remains a turnaround story — and turnarounds take time. The stock offers potential upside based on valuation, but it comes with elevated risk.

Here are the main takeaways:

• Valuation is attractive, with a fair value estimate of ~$32.53 versus a market price near $23.

• Cost-cutting is showing results, with positive operating cash flow and improved margins.

• New products are key, and the upcoming earnings report should shed light on whether Xeon 6 and others are gaining traction.

But also:

• ⚠️ Competitive headwinds remain strong, especially from Nvidia and AMD.

• ⚠️ Free cash flow is still negative, due to heavy capital expenditures.

• ⚠️ Geopolitical and macroeconomic risks add uncertainty.

In summary, Intel’s stock appears undervalued — but high risk. If you already own the stock, hold through earnings. If you’re looking to buy, it may be wiser to wait until after the report, assess the results, and then decide. In a situation like this, capital preservation and risk management take precedence over fear of missing out.

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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