Our Confidence in Intel Is Renewed

Amid a backdrop of a potential cyclical downturn in semiconductors, supply shortfalls, and competitive concerns from AMD’s aggressive product roadmap,

We are maintaining our $65 fair value estimate for the firm and believe prospective investors should find current levels enticing, as we expect Intel to successfully defend its turf across both PC and server CPU arenas, while continuing to generate substantial traction in Artificial Intelligence and automotive via its auxiliary business units.

Third-quarter revenue rose an astounding 19% year over year and 13% sequentially, to $19.16 billion. Client computing group, or CCG, sales rose 16% year-over-year to $10.2 billion thanks to strength in 2-in-1 and gaming PCs as well as modem share gains in the iPhone. Reported supply shortages notwithstanding, the firm enjoyed 6% PC CPU volume growth while notebook and desktop ASPs rose 4% and 10%, respectively, as Intel prioritized Core processors in its manufacturing network. Similarly, data center group, or DCG, sales increased 26% year over year to $6.1 billion with volumes and ASPs up 15% and 10%, respectively thanks to prioritization of Xeon scalable processors.

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