Intel Under Pressure Amid Investor Concerns

Investing.com — Intel (NASDAQ:INTC) remains under pressure as several key investor debates continue regarding the company’s long-term outlook.

According to Bank of America analysts, who maintain an Underperform rating with a $21 price target on the stock, Intel faces “a unique confluence of competitive, financial, and strategic threats” without any immediate positive catalysts in sight.

Key Concerns

Manufacturing Capability

One of the biggest questions surrounds Intel’s manufacturing capability. The bank notes that the company’s reliance on external foundries, such as TSMC, has increased as its ambitious “5 nodes in 4 years” roadmap faces challenges.

Intel’s success in developing its 18A process is critical for its turnaround; however, BofA states that “so far, there has been no external proof points of success.”

Revenue from Amazon Deal

Intel’s recent deal with Amazon (NASDAQ:AMZN), which some viewed as positive, was characterized by BofA as “a framework with no guarantees of any revenue.”

Talent Retention Challenges

Another debate is about Intel’s ability to retain talent, especially in the wake of frequent restructuring. BofA highlights that Intel’s revenue per employee, at $454,000 per year, significantly lags behind competitors like Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), and TSMC. This suggests challenges in attracting and retaining top talent, which could hinder recovery efforts.

Free Cash Flow and Debt

Free cash flow (FCF) generation remains a pressing concern. Intel’s high operating and capital expenditures are expected to remain elevated, with BofA warning that the company “would not work without a credible gross margin path to 50%+.”

Intel’s current debt of $53 billion compounds the pressure on its ability to generate meaningful FCF.

Market Position

Lastly, BofA notes that Intel’s position in the x86 CPU market is being challenged by the rising adoption of ARM processors in PCs and servers. The bank projects that ARM’s market share in PCs could triple by 2028, further eroding Intel’s dominance.