Intel: Supply Chain Drama & Valuation Questions

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So, Intel (INTC +0.11%) had an earnings report. Let’s just say it wasn’t exactly a plot twist where everything magically works out. The stock took a tumble after hours, which, honestly, is becoming a bit of a recurring theme. It’s like the chip industry is a really complicated reality show, and Intel is always just slightly behind on the challenges.

They’d been riding high, which, you know, sets the bar. Like trying to follow up a Beyoncé concert with a ukulele solo. Turns out, the biggest problem isn’t a lack of people wanting chips (the silicon kind, not the potato kind, though I’m pretty sure those are also in short supply these days). It’s actually getting them made. Supply chain issues, people. It’s the corporate equivalent of realizing you promised to bake cookies for 50 people and only have a bag of flour.

Supply Chain Shenanigans

They reported revenue down 4% year over year, but earnings per share were up 15%. It’s like getting a raise while simultaneously having your office space shrunk. The numbers weren’t terrible, but they exceeded guidance… mostly because expectations were already set at “barely functional.” They managed to navigate the shortages, but the next quarter? Buckle up.

The CFO, David Zinsner, casually dropped the bomb that Q1 supply will be “at its lowest level.” That’s corporate-speak for “We’re basically building ships in bottles right now.” They’re forecasting revenue down around 11% and… zero earnings per share. Zero! It’s like they’re running a charity, except instead of helping people, they’re making processors.

Demand is apparently fine. Everyone still wants computers, servers, and whatever else needs a brain. But if you can’t make the brain, it doesn’t really matter how many people are lining up to buy it. They’re even seeing a boost in data center and AI revenue – which, let’s be honest, is the only thing keeping the whole tech sector afloat at this point. It’s like a life raft made of algorithms.

So, the story is clear: people want Intel’s stuff, especially the AI stuff. But whether they can deliver that stuff is a whole other question. It’s a classic case of “we have the vision, but can we actually, you know, do it?”

Valuation: A Numbers Game (That Doesn’t Add Up)

The market cap is around $230 billion after the stock dip. That’s… a lot. It’s like paying for a mansion, then finding out the plumbing is held together with duct tape. Shares are still expensive, especially considering they’re not currently profitable on a GAAP basis and are expecting a significant sales decline.

Their price-to-sales ratio is over 4. Compare that to Nvidia (24) and Broadcom (25) – those guys are basically printing money. Even Texas Instruments, which is growing slower, has a higher ratio. It’s like Intel is asking you to pay a premium for a product that’s currently… under construction.

The market is clearly betting on improved supply and continued demand. But that’s exactly the problem – it’s already priced in. It’s like going to a concert where everyone is already screaming before the band even walks on stage.

They are saying supply will improve in Q2. That’s good news, right? And they have visibility into demand, which is also good. But there’s always the risk that the same execution issues that have plagued them for years will resurface. It’s like a recurring nightmare where you’re trying to build a Lego castle, but all the pieces are missing.

Could Intel be a good buy at some point? Maybe. But right now, the risk-to-reward ratio just isn’t attractive enough. Waiting for a bigger pullback or more evidence of improved execution seems like the smartest move. Because let’s be real, sometimes the best investment is just… patience. And maybe a good streaming service.

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2026-01-23 07:33