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Intel Might Be Down, But It's Certainly Not Out

By Neil Rozenbaum – Oct 22, 2021 at 10:00AM

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Intel stock is down close to 10% after reporting earnings.

In this video, I will be going over Intel's (INTC 1.25%) Q3 earnings report and talking about its plans to take on AMD and Nvidia in the next couple of years. You can find the video below.

Earnings summary

For the third quarter, Intel reported earnings per share of $1.71, an increase of 59% year over year, which beat its own guidance by $0.61. Revenue came short at $18.1 billion, growing 5% YOY but missing estimates by $0.1 billion. Gross margin was 57.8%, 2.8 percentage points above guidance and up 1.3 percentage points YOY. But the big reason the stock fell close to 10% (besides the small miss on revenue) is that the company expects gross margins to be lower for the next two or three years as it continues to invest heavily. 

Full-year revenue outlook remains unchanged at $73.5 billion, and Intel expects EPS to be $5.28, up 4% YOY and an increase of $0.48 from prior guidance.

The comeback

Intel is positioning itself to make the comeback of the century. That won't happen overnight, and it won't be cheap, either. That's why the company said that it expects gross margins to be lower in the short term. I see this as the correct price to pay for leadership in the industry. For years, Intel has underinvested compared to its competition, and the results are clear: AMD and Nvidia have gained market share while Intel has fallen behind. 

But that might slowly change with big investments in new foundries, new architecture, and an expansion into the PC hardware market. Regarding the PC hardware market, Intel has been poaching managers and engineers from AMD, EA, and Amazon Prime Gaming. If you can't beat them, hire them. 

For the full insights, do watch the video below, and consider subscribing. 

*Stock prices used were the closing prices of Oct. 21, 2021. The video was published on Oct. 22, 2021.

Neil Rozenbaum owns shares of Inte. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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