Intel investors are banking on a comeback — and then some

{"text":[[{"start":3.85,"text":"When is a good time for a company to raise equity? When its shares are expensive, according to financial lore. Intel, which said on Monday that it would issue at least $15bn of new stock, is following that rule to the letter. Its shares trade at nearly 55 times forecast earnings for the coming year, according to LSEG data — higher than at their peak before the 2000 tech crash. The question is who would buy at such a price."}],[{"start":30.05,"text":"True, this is not the Intel of old. The US chipmaker, once an industrial icon known to households for its “Intel inside” slogan, endured years of dashed hopes and wasted investment. Under the leadership of Lip-Bu Tan, who replaced the Pollyanna-ish Pat Gelsinger in March 2025, the company has cut headcount by a fifth, sold stakes in subsidiaries, trumpeted an alliance with Elon Musk’s Tesla and — until recently — reined in capital expenditure."}],[{"start":null,"text":"

"}],[{"start":60.55,"text":"Intel has been helped by trends unrelated to Tan’s stewardship. The spillover of AI mania, from high-end GPU chips into the CPUs that Intel makes for servers and data centres, has transformed demand and pricing. Rival AMD said recently that it thinks the market for such chips could be $220bn by 2030; a few months earlier it had forecast roughly half that. "}],[{"start":83.8,"text":"Tan is not saying where the new fund will be spent. But among his brood of divisions, Intel’s foundry is the hungriest. The goal is to grow orders to make and package other companies’ chips, a business that brought in just $307mn of outside revenue last year. Some analysts — including those at Intel bookrunner Goldman Sachs — think that could top $20bn by 2030. Getting there means reopening the cheque book: Bernstein analysts predict capital expenditure will hit a record $26bn in 2027."}],[{"start":null,"text":""}],[{"start":117.65,"text":"This is, in one sense, going back to the future. Gelsinger wanted to bring in $15bn of external foundry revenue by 2030, and threw lashings of investment at his target. Tan’s odds are better. Global chip shortages aside, Intel’s shareholders now include chip giant Nvidia and the US government. While not a guarantee of business, that gives companies such as Apple and the so-called AI hyperscalers a gentle shove in Intel’s direction."}],[{"start":148,"text":"Nonetheless, investors are buying into the $15bn capital raise with some generous assumptions. Imagine Intel hits Goldman’s foundry revenue estimate by 2030, that the company’s data centre business triples by then, and that PCs return to their peak revenue from 2021. That would total $120bn of sales. Apply a hypothetical 40 per cent operating margin, which Gelsinger hoped to achieve for the non-foundry business by the end of the decade, tax it, and it suggests earnings of around $40bn. "}],[{"start":180.85,"text":"In that happy scenario, Intel’s current market capitalisation of about $500bn would equate to more than 12 times 2030 earnings, roughly where Taiwanese chip colossus TSMC and larger rival AMD trade, according to Visible Alpha. Those are challenging comparisons. Tan’s task now is to make Intel’s insides match its highly valued outside."}],[{"start":211.79999999999998,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786449874_6480.mp3"}