Nancy Pelosi Buys Intel. What Comes Next and If You Should Buy INTC Stock Too.

In exchange, Intel agreed to issue the government roughly 275 million Intel shares immediately and up to 159 million additional shares placed in escrow and warrants for up to 241 million additional shares at $20 per share if Intel loses majority ownership of its foundry business. In this, the 159 million escrowed shares are released to the government as Intel receives additional payments under the Secure Enclave program.

Overall, Intel closed the quarter with a cash balance of $12.9 billion, much higher than its short-term debt of about $2 billion.

The valuation of INTC stock also remains elevated. The forward price-to-earnings (P/E) ratio of 87 times, price-to-sales (P/S) ratio of 8.3 times, and price-to-cash flow (P/CF) ratio of 39 times are all above the respective sector medians.

What’s Next for Intel?

The second quarter saw Intel launching some key products and updates.

The Xeon 6+ data center CPU is particularly noteworthy. The flagship Xeon 6990E+ provides 288 efficiency cores, double the 144 core ceiling of the prior Xeon 6 efficiency core family, along with 576 MB of cache and a 450-watt thermal rating. Intel also offers 144, 192, and 264 core versions, giving customers room to balance density against power. The processor is manufactured on Intel 18A and uses Foveros Direct 3D packaging. Intel claims up to 2.5 times the performance and 79% better performance per watt than the previous Xeon 6 efficiency core generation. It also claims that one Xeon 6+ server can replace as many as nine servers using second-generation Xeon processors.

If the claims are true and delivered in the real world, then the Xeon 6+ could see increasing customer adoption as fewer servers can mean lower electricity, cooling, maintenance, rack, and software costs.

Then there is Intel’s 2.5D packaging technology, Embedded Multi-die Interconnect Bridge (EMIB). The newest version, EMIB T, improves on earlier designs by adding vertical silicon connections through the bridge. Power can travel more directly to the chiplets, leaving more routing space for data and helping the package support demanding high-bandwidth memory. This matters for AI accelerators because the processor, memory, networking, and input output tiles must exchange enormous amounts of data without wasting power. Intel says its current packaging can scale to about eight times the standard, with a path beyond 12 times by 2028.

Moreover, compared with Taiwan Semiconductor’s (TSM) CoWoS, EMIB has a credible architectural cost advantage because it avoids a full-sized silicon interposer. It also allows customers to mix chiplets made on different manufacturing processes and potentially at different foundries. That flexibility is useful when an expensive leading process is needed only for the compute tile, while input output and control functions can remain on cheaper, mature processes. However, Taiwan Semiconductor still holds the stronger commercial position, supported by a much larger foundry customer base and a mature CoWoS ecosystem.     

What Do Analysts Think of INTC Stock?

Overall, analysts have a consensus “Hold” rating on Intel stock. The mean target price of $113.87 indicates potential upside of about 24% from current levels. Out of 45 analysts covering INTC stock, nine have a “Strong Buy” rating, one has a “Moderate Buy” rating, 33 have a “Hold” rating, and two have a “Strong Sell” rating.

On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com