To The Moon

$Intel(INTC)$ $Apple(AAPL)$

Intel (NASDAQ: INTC) has been a company in transition for nearly a decade. Once the dominant force in semiconductors, it ceded ground to rivals like AMD (NASDAQ: AMD) and Nvidia (NASDAQ: NVDA) while losing its manufacturing edge to TSMC (NYSE: TSM). Now, with its market capitalization reduced to just $116.2 billion—a fraction of its peak and far below peers—Intel is fighting for relevance in the AI era.

This week, reports that Intel has approached Apple (NASDAQ: AAPL) for a potential investment and strategic partnership injected new energy into the stock. Though discussions are still preliminary, the possibility of Apple aligning with Intel sent shares 6% higher on Wednesday. For a company whose narrative has been dominated by decline, the news represents something more important: hope.

But hope is not the same as execution. Investors now face several pressing questions:

1. Is Intel still worth buying at $30?

2. Could the stock realistically reach $40 in the near term?

3. With a $116.2 billion market cap, how much upside remains if Intel executes?

4. And perhaps most intriguing—if Apple joins hands with Intel, could other giants follow?

Intel Today: From Leader to Laggard

Intel’s challenges are well-documented:

• Process delays: Intel famously fell behind in chip manufacturing technology, allowing TSMC to take the lead in advanced nodes.

• Competitive erosion: AMD gained share in CPUs, while Nvidia became the undisputed king of GPUs and AI accelerators.

• Apple breakup: Apple abandoned Intel chips in Macs, adopting its own Apple Silicon (M1, M2, M3)—a symbolic blow to Intel’s prestige.

• Margin pressure: Gross margins fell from ~60% a decade ago to below 50%, as heavy capital expenditures strained profitability.

Despite these setbacks, Intel is not a company on the verge of collapse. It remains a critical supplier in PCs and servers, while its new strategy—anchored in Intel Foundry Services (IFS)—aims to restore competitiveness by opening its fabs to third-party customers.

Why Apple Might Be Interested

Apple is not in the business of charity. If it invests in Intel, it would be for strategic reasons:

1. Diversification away from TSMC

• Apple depends heavily on TSMC for its cutting-edge chips, most of which are produced in Taiwan. With geopolitical tensions simmering, this dependence is a major vulnerability.

• Intel’s U.S.-based fabs (boosted by the CHIPS Act) could offer Apple geographic diversification.

• Securing Foundry Capacity

• Apple designs its own chips but does not manufacture them. An investment in Intel could secure long-term access to next-gen foundry capacity.

• Leverage in Negotiations

• Even symbolic ties with Intel would strengthen Apple’s bargaining position with TSMC and Samsung.

• Potential for Co-Development

• Intel still has world-class engineering in areas like CPUs and networking. Joint R&D in AI chips or custom silicon could provide synergies.

The move would be less about Macs and more about supply chain resilience and strategic hedging.

Intel at $30: Value Trap or Opportunity?

At $30/share, Intel trades at levels that many long-term investors view as cheap—at least on the surface.

• Market Cap: $116.2B

• Forward P/E: ~12x (vs AMD at ~35x and Nvidia at ~40x+)

• Price/Book: ~1.2x, near historical lows

• Dividend Yield: ~1.5% (after cuts in recent years)

Intel’s valuation reflects pessimism about its turnaround. But cheap doesn’t always mean undervalued—sometimes it signals a value trap. The crux is whether Intel can regain technological leadership and monetize its foundry investments.

Could Intel Reach $40?

A rally to $40 would imply ~33% upside. Achieving this requires multiple catalysts:

• PC and Data Center Recovery: Intel still earns the majority of its revenue here. Even modest demand recovery would stabilize earnings.

• Foundry Progress: Securing contracts with major customers (Apple, Microsoft, Amazon, etc.) would validate Intel’s foundry pivot.

• Margin Expansion: Restoring gross margins above 50% would restore investor confidence.

• AI Exposure: While Nvidia dominates, Intel could carve out niches in inference chips and networking solutions.

A $40 target is plausible in the next 12–18 months if execution improves and partnerships materialize.

How Much Upside Remains?

With a $116.2B market cap, Intel is far smaller than peers:

• AMD: ~$200B

• TSMC: ~$500B

• Nvidia: ~$1.2T

Intel doesn’t need to catch Nvidia to deliver significant upside. Even regaining its old ~$250B valuation would more than double the stock. If Intel successfully scales its foundry business, upside could be larger.

Who Else Could Join?

If Apple takes a stake or forges deeper ties with Intel, it could trigger a domino effect. Other tech giants may want to secure their own slice of foundry capacity.

• Microsoft (MSFT) – Critical in PC and cloud, Microsoft could support Intel’s ecosystem to protect Windows and Azure hardware supply.

• Amazon (AMZN) – AWS designs its own Graviton CPUs and AI chips. Intel could become a secondary manufacturing partner.

• Google (GOOGL) – With its TPU (Tensor Processing Unit) projects, Google has every reason to ensure diversified chipmaking capacity.

• Meta (META) – Heavy AI infrastructure spending could push Meta to align with multiple foundry partners.

• U.S. Government – Though not a “company,” Washington is deeply invested in Intel’s survival through subsidies and contracts under the CHIPS Act.

If Intel can market itself as the national alternative to TSMC, partnerships could extend beyond Apple to the entire U.S. tech sector.

Valuation: Breaking It Down

Let’s run through three valuation approaches.

1. Relative Multiples

• Intel: Forward P/E ~12x, EV/EBITDA ~7x

• AMD: Forward P/E ~35x, EV/EBITDA ~20x

• Nvidia: Forward P/E ~40x+, EV/EBITDA ~30x

• TSMC: Forward P/E ~22x, EV/EBITDA ~15x

👉 Even with a “laggard discount,” Intel looks undervalued. If it re-rated to just 15x earnings, shares could easily exceed $40.

2. Sum-of-the-Parts (SOTP)

• Client Computing (PC CPUs): ~$40–50B

• Data Center & AI: ~$40B

• Foundry Services: ~$30–50B (if Apple/others commit)

• Mobileye Stake & Miscellaneous: ~$10–15B

Fair value range: $120–150B. With execution, upside could expand toward $200B+.

3. DCF Scenarios

• Base Case: Revenue CAGR ~5%, margins stabilize at 45%. Fair value ~$32–35/share.

• Bull Case: Revenue CAGR ~8%, margins >50%, foundry wins big clients. Fair value ~$45–50/share.

• Bear Case: Revenue stagnates, capex burns cash. Fair value ~$20–25/share.

Risks

• Execution risk: Intel has a track record of missing deadlines.

• Competition: AMD, Nvidia, and TSMC remain formidable.

• Capital intensity: Building fabs costs tens of billions annually.

• Apple uncertainty: Talks may fizzle, leaving Intel exposed.

• Geopolitics: China tensions and export restrictions could hurt demand.

Investor Sentiment

Intel has long been seen as a “fallen giant.” But sentiment can change quickly. The stock’s 6% rally on partnership rumors shows the market is eager for positive catalysts. If Apple or another giant signs on, sentiment could shift dramatically.

Verdict: Buy, Hold, or Wait?

Intel is no longer the undisputed king of chips—but it is not dead either. With a depressed valuation, a national-security role in U.S. manufacturing, and potential partnerships brewing, Intel offers asymmetric upside.

• Buy Case: At $30, Intel is cheap. A successful foundry pivot could double the stock over time.

• Hold Case: For investors already holding, patience is warranted—especially if Apple or others confirm deals.

• Wait Case: For cautious investors, it may be better to see execution before committing.

My view: Intel is a speculative Buy at $30 for long-term, risk-tolerant investors. A move to $40 is realistic, and if Apple joins, the upside could extend further.

Key Takeaways

1. Intel is reportedly in early talks with Apple for a potential investment, sparking a 6% share rally.

2. At $30/share and $116.2B market cap, Intel is cheap but risky.

3. A move to $40/share (~33% upside) is achievable with demand recovery and foundry wins.

4. Apple’s involvement would strengthen Intel’s credibility and supply chain diversification efforts.

5. Other giants—Microsoft, Amazon, Google, Meta—may follow if Intel secures Apple.

6. Valuation suggests significant upside if execution improves, but risks remain high.

7. Verdict: Speculative Buy for long-term investors who believe in Intel’s foundry pivot.