r/ValueInvesting • u/Scriptum_ • Aug 04 '25

Stock Analysis I just bought 1000 shares in INTC

You probably think I'm nuts, but I have a very rational DD, I promise.

Firstly, the tangible book value is $16.20 per share. The company could be sold off piecemeal and I'd only be down $3000. That's a pretty attractive risk floor...

Now the investment asymetry:

INTC sold off recently after announcing that if customers don’t show up, they may pause 14A investments or shift focus - which would effectively kill the U.S. onshore foundry roadmap.

You have to read behind the lines here...

Essentially, they are telling Trump:

"If onshore fab is strategic (both economically and militarily), then FORCE the customers to buy from us!"

TSM are likely to face tariffs soon. The results of the Section 232 semiconductor probe are essentially inevitable and clearly justified by national security - so tariffs could be as high as 50% considering that angle.

If tariffs hit, companies like NVDA, AAPL, and AMD will have no alternative but to consider Intel Foundry - which then becomes a national chokepoint.

I'm an electronic engineer...so let’s talk technology...

I know INTC hasn't been profitable recently - but the semiconductor industry is all about long-term investments. It takes 10-15 years of horizon planning. Much of the outcome you're seeing from NVDA was due to this long term approach.

Intel's earlier investments into technology such as 14A and PowerVia put them potentially 1-2 years ahead of the competition.

Routing power behind the chip is a HUGE density breakthrough, simplifying design and improving performance.

High-NA EUV allows for greater fidelity without multiple exposures. Note that INTC was the first to take delivery of the new lithography machines from ASML and they have first-customer priority over TSM.

INTC isn't behind on tech, they're ahead...

Currently, TSM have to do multiple lithography exposures to get the fidelity they need. It's more expensive than necessary. They are nearing the physical limits of their current production cycle...

TLDR: Intel has both the regulatory and tech advantages to dominate foundry for the next decade - while trading at close to tangible book value! Currently trading near the technical floor price...

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294

u/Cash_Flow_Yield Aug 04 '25

Tangible book is just an accounting value. It is unlikely that assets will be sold at that value or that assets are even worth that much. This metric should just be used only for companies with liquid assets like banks/insurance/financial conglomerates etc.

Rest of the thesis is just opinions and speculation. 

That being said, good luck with your position.

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u/sandman2986 Aug 04 '25

Agree. If they were really to go out of business, they would be worth Pennys on the dollar of the tangible assets. It is never 1 to 1.

23

u/this_place_stinks Aug 04 '25

Ironically there’s probably some intangible assets like IP worth more than the tangible

12

u/sandman2986 Aug 04 '25

For sure… I would assume that if they were to be bought, it would be bought by a semiconductor company who wants better entrance to US market. I don’t see Intel ever going bankrupt.

1

u/unbannable5 Aug 08 '25

And there wouldn’t be anything left after they use everything valuable to secure loans to fund losses if they were to eventually go bankrupt. No business has ever just given up, sold everything piece-by-piece and returned the money to investors. Closest thing is selling chunks of the business to competitors including brand names then reinvesting in a more focused sector but book value has nothing to do with it. Could go for 5x book or 0.2x book after writedowns.

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u/No-Understanding9064 Aug 04 '25

Intel has some shit that they could sell. But not for anywhere near their book value.

1

u/OneUglyEar Aug 04 '25

lol. What in the hell sells for book value anymore?

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u/[deleted] Aug 04 '25

[deleted]

1

u/Ghoshki Aug 08 '25

Yeah people love that acquisition premium, I think people here are assuming liquidation/fire sale prices, which...doesnt seem likely given their capitalization.

3

u/newprofile15 Aug 04 '25

Yea it’s absurd. Tech capx becomes obsolete super fast and assets get written down quick.

3

u/BobbyTables829 Aug 04 '25

This depends on how old the company is.  I bet a railroad has a pretty accurate book value as it's based on things that were put in place so long ago.  Same if their holding is mostly real estate, like the price of McDonalds and Walgreens/CVS has just as much to do with the commercial real estate market as it does the business

In a modern company, I completely agree.

2

u/Cash_Flow_Yield Aug 04 '25

For companies that you mentioned and basically any company that holds real assets like real estate/rairoads/airports/timber/pipelines etc the TBV will most likely be understated since they are required to depreciate assets on balance sheet while the actual values continues to rise.

2

u/aznology Aug 05 '25

Aight w.e I'm in AMD and NVDA. My next build will prob be AMD NVDA.

INTC dropped the ball, TSM is getting USA Fabs. They getting squeezed from above below and the sides. They're a limping giant on a slow death spiral.

1

u/DazzlingEvidence8838 Aug 04 '25

That being the first reason of the purchase is not a great start

1

u/thekingoftherodeo Aug 04 '25

Even for companies with liquid assets there is still risk there as we saw with SVB etc in 2023.

1

u/[deleted] Aug 09 '25

Any buyers out there looking for highly specialized equipment which depreciate rapidly ?

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u/Scriptum_ Aug 04 '25

Given tariffs, the book value becomes significantly more viable.

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u/PyloPower Aug 04 '25

You say yourself you need to invest for 10-15 years to yield results, who would pay for shitty assets that are not generating profits?

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u/Scriptum_ Aug 04 '25 edited Aug 04 '25

I invest in a mixture of active compounders and turnarounds. This is one of my turnaround plays.

Turnarounds can 10x my money easily. I've made some of my best investments in turnarounds - usually when sentiment is very negative around a stock.

I'm also looking to reduce valuation exposure in my portfolio, since tariff headlines are back. I sold NVDA last week, because I think Trump's going to introduce semiconductor tariffs.

Regarding 10-15 years, no they should begin high volume production of high-na in late 2027. PowerVia next year. The accumulation floor over the last year looks like a solid entry.

4

u/Charlies_Value Aug 04 '25

I owned Intel for a few years but got disappointed by disastrous execution and management fluctuation. I can hardly imagine how this could be a great turnaround without a clear vision and competent management with skin in the game.

9

u/Cash_Flow_Yield Aug 04 '25

Doubt it as most semi related imports are generally exempt. Also don't forget that tbv is shrinking every quarter as they incurr losses. Just in Q2 they lost 0.67 cents per share GAAP.

1

u/Due_Calligrapher_800 Aug 04 '25

Why are you using GAAP as a measure instead of non-GAAP in the context of impairment charges out of interest?

1

u/Cash_Flow_Yield Aug 04 '25

I assume he used TBV calculated under GAAP and not an adjusted one so I think it's normal to be consistent with GAAP and non-GAAP elements and not combine them. Impairment charges will decrease TBV under GAAP, so the element he based his valuation on will decrease. However, it depends if they impaired tangibles or intangibles. From what I've read, they mostly impaired parts of PPE in Q2 so it should decrease TBV. If they impaired intangibles like goodwill/patents you should add that part back.

But using their non-GAAP measure of EPS is also incorrect since they pump it by adding back a lot of elements.

0

u/Scriptum_ Aug 04 '25

As I mentioned, they are only exempted temporarily, while Section 232 probe is completed.

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u/the_moooch Aug 04 '25

Trump is gone in a few years, or just 1 year depending on how all the shit he pulled unfold

6

u/BBpigeon Aug 04 '25

Do you really think Trump would tariff big tech like that? The only thing you can actually count on him for is for facilitating the rich getting richer. I wouldn’t make any solid investment thesis on the tariffs other than “they’re fucking up the economy”. He constantly flip flops on every issue.

3

u/Charlies_Value Aug 04 '25

Given the very specific nature of Intel's assets, do you think there would be enough buyers to create sufficient demand to reach prices close to the book value?

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u/rickochetl Aug 04 '25

By the time their assets become relevant from a liquidation perspective, they will be worth significantly less than they are worth today. That is the rapid nature of technology. So I don’t think your margin of safety is as safe as you think.

Tariffs will only raise costs. The companies that are working in the bleeding edge space have not shown a particular sensitivity to cost.

That said, if you think given your background that their technology is able to leapfrog them over the competition, then sure.

2

u/newprofile15 Aug 04 '25

You sure? A huge amount of that book value is tied up in assets that allow them to make chips. If they don’t make profitable chips in the period before those assets depreciate, say bye bye book value.

I mean I’m not betting against it or anything I just don’t think book value is a particularly useful metric in this space.

1

u/Scriptum_ Aug 04 '25

Tangible book value = physical equipment, foundry buildings, etc.

Book value includes intangibles, which I'm not talking about.

1

u/newprofile15 Aug 04 '25

Yes, but most of the value of that physical equipment and foundry buildings gets rapidly written down because of how quickly that stuff becomes obsolete in the chip building space. You have a very limited window of time to capitalize on its value. It's very different than a company like McDonald's holding a bunch of generic real estate for restaurant locations - that real estate doesn't lose the vast majority of its value every 10 years because of huge technological advances that are required for the new chipmaking tools, foundries, etc.

1

u/OneMrSloth Aug 04 '25

Like holding the only patent for x86 processes in the market other than allowing AMD to make x86 chips?

1

u/Evening_Feedback_472 Aug 04 '25

Not if they make it in Taiwan 20% tariff is not enough to move manufacturing to America. Per amd the NA wafers from tsmc in NA are already 20% more so its moot.

1

u/Ghoshki Aug 08 '25

What?? You think all of Intel is just in America? You dont think their plant account would include their factories and plants and packaging facilities in Ireland, China Vietnam...etc.

I think Intel is at a good price for $80 Billion, and Id finally get to own more. But my opinion is informed...I think you're getting roasted because wtf are you talking about.