What happened

Shares of semiconductor giant Intel (INTC -3.79%) fell as much as 11.7% on Friday following the company's third-quarter earnings report. The financial figures in this mixed report were solid enough, but Intel's ambitious turnaround plan left many investors more fearful than inspired.

So what

Intel's third-quarter sales fell 1.1% year over year to $18.1 billion. Adjusted earnings jumped 54%, landing at $1.71 per diluted share. Your average analyst had been looking for earnings near $1.11 per share on revenue in the neighborhood of $18.2 billion.

A robotic hand builds coin stacks on top of a laptop computer's keyboard.

Image source: Getty Images.

Some Intel owners may have expected management to present a quick fix to the restricted top-line growth and modest bottom-line profits in this report, but they walked away disappointed. Instead, CEO Pat Gelsinger said that Intel is using this slow and challenging period to suit up for a robust long-term opportunity.

"The digitization of everything accelerated by the four superpowers of AI, pervasive connectivity, cloud-to-edge infrastructure and ubiquitous compute are driving the sustained need for more semiconductors, and the market is expected to double to $1 trillion by 2030," Gelsinger said on the earnings call. "We are one of the few companies with both the technical and financial resources to win in a market that is increasingly leading edge and challenged by the extreme physics of rejuvenating and continuing Moore's law."

Now what

Gelsinger's vision for the long haul is both expensive and slow in the early innings. Intel has broken ground on several new chip manufacturing plants and signed up a couple of top-tier clients for its brand-new role as manufacturer of other companies' chip designs. These efforts play into the extended strategy shift.

And they don't come cheap. Intel now plans to funnel between $25 billion and $28 billion into capital expenses in 2022, followed by even higher cash investments in the next couple of years. To put these figures into context, Intel's record for annual capital expenses stopped at $16.2 billion in 2020:

INTC Capital Expenditures (Annual) Chart

INTC Capital Expenditures (Annual) data by YCharts.

I'm not surprised to see investors focus on the near-term cash costs of Intel's demanding infrastructure investments, so today's price drop makes sense even in the light of a perfectly decent earnings report. At the same time, I'm excited to see Intel take full advantage of the revamped and upgraded business platform the company is building right now. For us long-term investors, Intel looks like a fantastic buy today at just nine times trailing earnings.