I will start off my discsussion using a couple of examples where investors/analysts missed the big picture and the company/stock has proven that they're much more than that.
In July 2013, Microsoft stock had the biggest drop of the century after reporting their earnings. The stock dropped because of investors disappointment in the Surface RT laptop. They ignored the biggest elephant in the room that is Windows Azure, now known as Microsoft Azure. Azure is Microsoft's cloud computing division and it has been the major growth driver for Microsoft. Of course, the CEO change from Steve Ballmer to Satya Nadella helped but Satya's vision was all about cloud computing and it was completely ignored by investors at that time.
Back in 2018, investors/analysts were focusing on iPhone X sales figures. Warren Buffett saw the big picture. Billionaire investor Warren Buffett said long-term investors of Apple’s stock shouldn’t obsess with near-term iPhone sales. “The idea that you’re going to spend loads of time trying to guess how many iPhone X are going to be sold in a three-month period totally misses the point,” he stated. His big picture was looking at Apple as a brand and its ecosystem
Look at where Microsoft and Apple stocks were then and where they are trading at now.
I'd like to use the same logic for Intel. It dropped 20% after the earnings call last quarter in July. The big picture Intel's Investors/analysts are missing is that they are ignoring this industry leader’s methodical transition into higher growth businesses and focusing solely o solvable supply chain problems ( 10 nm/7 nm transistor density issues). I will not be discussing the fact that AMD/NVidia are using 7 nm process and that Intel isn't. Also, the fact that TSMC will be on 5 nm by the time Intel fixes the 10 nm/7 nm node problems. Those are problems I'm well aware of and they have been beaten to death already. There is nothing I can add to that. I will talk about that later on but in the end as not the focal points. What I'd like to talk about and focus on is the data-centric transformation and its MobilEye division.
Data Centric Transformation
Intel in 2019 pivoted from being a PC centric business to a data centric business. The TAM of this is 250 billion dollars. Revenue in this business group has grown from 42% of revenue in 2015 to 51% of revenue over the TTM. While many business transitions result in periods of low performance, as firms switch focus from declining to new businesses, Intel has managed to grow its revenue by 12% compounded annually over the past four years as it better positions itself for future growth.
Self driving business
Intel purchased MobilEye in 2015. It is now a wholly owned subsidiary of Intel . Mobileye has a plan to dominate self-driving. Self driving taxis and cars are a big growth business. MobilEye is in a great position to capitalize on this business. Mobileye says it shipped 17.4 million systems last year. Today, over 40 million cars have Mobileye technology installed, and its products have been selected for implementation in serial production of 313 car models from our 27 OEM partners by 2017 (compared to 36 car models across seven OEMs in 2010). Some of the partners include Volkswagen, BMW, Nissan, Ford. It also has partnered with NIO, a Chinese EV company which people have dubbed the Chinese Tesla.
The firm’s acquisition of Mobileye strategically positions it to build out its driverless technology business as well. In just three years, Mobileye has experienced rapid growth, with revenue increasing from $210 million in 2017 to $879 million in 2019. Its share of automobile semiconductor sales increased from just 0.5% to 1.9% over the same time. If Mobileye continues taking market share in this fast-growing segment, Mobileye’s could provide a meaningful contribution to Intel’s operations, as it made up just over 1% of revenue in 2019. ResearchAndMarkets.com expects the autonomous/driverless market to grow 18% compounded annually from 2020 to 2025. Intel is positioned to grow with this new market.
This is the side of Intel most people immediately associate Intel with. Intel’s PC-centric business is not something to write-off. There is still a piece of the PC-centric market where Intel has an opportunity to grow: graphics processing units (GPU). Allied Market Research, expects the GPU market to grow from $19.8 billion in 2019 to nearly $201 billion in 2027 or by 34% compounded annually. For example, Intel is aggressively entering the discreet GPU business, which is about 80% of the current GPU market. The iGPU processors codenamed Tiger Lake just released September 2nd. Intel poached AMD's GPU guy Raja Koduri and nVidia's Tom Peterson. Intel hired engineers and marketing experts from Advanced Micro Devices and NVIDIA, the market leader in the space, to assemble a team to develop and rollout the firm’s Intel Xe GPU.
Intel is also releasing entry level processors. The entry-level processors will be targeted at budget-tier laptops and fanless mini desktops when they launch in early 2021.
7 nm/10 nm process
Since I have your attention until here – I'd like to say one final thing about this debacle. Lot of people assume that Intel's problems with this are due to complacency. Its not. Its due to Intel attempting to achieve and do something others have been unable to do, which is the exact opposite of complacency. Intel tried to use GAAFET for 7 nm when TSMC and Samsung warned Intel not to. Intel was warned by TSMC and Samsung that the GAA-FET technique is too challenging to implement at this point in time, but Intel’s pride and persistence led it to stubbornly try and tackle the GAA-FET problem, until it finally conceded this July.
I agree Intel fucked up here but the point I'm trying to make is that this was not due to complacency as widely believed. Intel has a lot of management problems, hostile work environment etc but complacency is not one of them. Intel never got complacent about its objectives, but it may have gotten complacent about its approaches, methods, and processes.
Tl/DR; Post Summary / Post Script :
I'm perfecty aware that AMD and nVidia are eating Intel's lunch and have better more powerful CPUs/GPUs. However, Intel is much more than that and its other divisions are what will drive future growth. Analysts and investors are missing this big picture.
Edit : positions 74000 in Intel Jan 2022 55 calls. https://imgur.com/GxExa8T.jpg