Intel Shares Collapse. Why I'm Still Not Buying the Stock

Intel's stock price plummeted following the company's announcement of weak Q4 guidance amid a slowdown in the PC market. Despite this, the reporter still does not recommend purchasing the stock. Intel's Q3 results were solid, with revenue increasing by 21% to $16.5 billion, but this was a deceleration from the previous quarter's 25% growth, and it met analyst expectations.

The company's biggest growth driver remained server CPUs, with data center and AI revenue surging 78% to $7.3 billion. However, Intel's larger client computing and physical AI group (CCPG) lagged, with revenue falling 5% to $8.1 billion and operating income declining by 15% to $2.3 billion. This decline was primarily due to the struggling PC market and IT budget constraints.

The reporter acknowledges Intel's strong performance in the server CPU market, driven by high demand for newer-generation CPUs and improved yields, but notes that the company is losing market share to competitors like Advanced Micro Devices, ARM Holdings, and ARM-based custom CPUs. Additionally, Intel faces challenges in the PC market and will experience a $600 million revenue hit due to an explosion at one of its fabs in Israel.

While the stock has become more reasonably priced, with a forward P/E ratio of 30 times, the reporter believes Intel does not warrant a premium multiple given the headwinds it is encountering. The reporter advises against buying Intel's stock and suggests looking for more attractive AI stocks instead.