Intel (INTC) stock has had a rough go of it, but the company is still dominant in the PC space. According to Mercury Research, as of the second of 2023, Intel commanded about 68.4% of x86 CPU market share, while AMD had 31.6%.
Intel’s share had grown about 3 percentage points, while AMD actually declined by as much on sequential basis. Intel is pressing on in advancing its chip manufacturing process and expects to maintain its leadership by launching 7nm Meteor Lake processors it announced in September. The company expects to release even more efficient chips, the Arrow Lake and Lunar Lake series, in 2024.
A CLoser Look at INTC Stock
The company has acknowledged its missteps and is taking steps to address them. Under CEO Pat Gelsinger, Intel has announced a new strategy called “4 nodes by 2025” to enhance production capacity and compete with TSMC.
The company has also shown its capable of dumping strategies that have not produced worthwhile results. For example, Intel intends to spin off its programmable chip business, which has failed to generate significant returns in recent quarters.
CFO David Zinsner said, “after a period of strong growth and tight supply, the FPGA [field-programmable gate array] business is entering a period of inventory burn.”
By streamlining its portfolio and operations, Intel hopes to improve its profitability and efficiency.
INTC’s valuation is cheaper than competitors
Intel is cheaper than the other large chip makers. Compared to its competitors, such as AMD and Nvidia, INTC stock is trading at a lower valuation based on metrics such as price-to-earnings and enterprise value-to-EBITDA ratios. I
n particular, Intel’s P/E ratio is trading at around 25.3x forward earnings, lower than AMD’s 36.6x forward earnings. Furthermore, Intel’s forward EBITDA multiple is 12.2, well below that of both Nvidia and AMD.
This suggests that the market is undervaluing INTC stock. Moreover, Intel pays a quarterly cash dividend of $0.125 per share. This provides some income and stability for investors while they wait for the company’s turnaround.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
