Intel Gives Weak Forecast After Supply Shortages Hurt Sales

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0:32Carol Massar:Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenevek. on Bloomberg Radio. Yeah, I want to bring in Ivan Feinseth, Research Director and Chief Investment Officer at Tigris Financial Partners. The firm has more than$500 million under management. Ivan has a buy rating on the company's stock.

1:14Carol Massar:Ivan, does just very, like your immediate knee-jerk reaction to this, does your rating, well, I know you can't answer that question, but your knee-jerk reaction, I'm not even gonna ask you, your knee-jerk reaction to the numbers here, you're shaking your head. It's not this quarter. It's not a quarterly story. It is a major shift in the company. And they have, I think, turned a major quarter. But the stock has also run up significantly from a low of 20. It hit$55. So I think it may have gotten a little bit ahead of itself and it may pull back. But I think everything that's going on under the new CEO, Lip Putan, is as planned.

1:54I mean, they are well positioned to benefit from AI data center demand, AI computer demand, their partnership with Intel, money from the U.S. government. So they are plenty flush to invest in all of their key growth initiatives.

2:13Carol Massar:So fundamentally, what's changed, Ivan, when it comes to this company? You obviously sound really upbeat. Is it just a case of having the backdrop because, you know, of the United States government? Is that what's done it? You know, kind of. Well, it's everything. OK. It's the it's first of all, it's the it's President Trump's push on what's sold here is made here, investing in U.S. semiconductor manufacturing capacity here, expanding the Intel foundry business, as well as the growth of data centers, the growth of AI-enabled PCs. So they are positioned, I think, perfectly to benefit from what was in the early innings that were going to be a long game of the AI-driven growth in both the tech sector and the US and the global economy.

3:10so okay i just want to this is a different company than it was six months ago

3:16Carol Massar:uh as a result of as a result of the u.s investment and i'm wondering what that position what that type of uh what that investment does for for lipoutan's position like you know when you're the ceo of a company and you come out with a a report you're you're obviously uh you got to worry about the board you got to worry about shareholders now he's got to worry about a phone call from President Trump because the president likes to talk about how well the stock has done since the U.S. made that investment. What is that? How does that change the dynamic? It doesn't. But it's really funny that President Trump wanted to go from deporting the guy to giving the guy money.

3:59Carol Massar:Hey, that's the power of a conversation, right? But it also shows. Absolutely. But it also shows how quickly things can change, certainly from the White House perspective? Well, it highlights Trump's perspective on driving the U.S. manufacturing infrastructure. U.S. leadership in all key areas and semiconductors is a very important area, especially that Intel makes semiconductors for the defense industry. Interesting. Okay, so does it make the defense business stronger? Absolutely. Hey, there's no better partner. one a number one partner i i don't well it could be a tie u.s government and nvidia okay so let me those are the two best partners you can get let me let me ask this question a different way than ivan and that's about where intel would be right now if the u.s government had not made that investment would this be a completely different picture would it have been a completely different quarter well um yeah i think this has helped i think this removes concerns balance sheet concerns and allows the company and the CEO to focus on business.

5:06A partnership with NVIDIA is great, and a partnership with the USK, it opens up doors. They're back working with Apple. They're going to be working with everybody. And I think you're going to see Intel as a major contender as a semiconductor foundry, semiconductor manufacturer to take on Taiwan Semiconductor.

5:27Carol Massar:So, okay, going back to Intel, under pressure in the aftermarket, We continue to track the share price, I think down about 4 % or 5 % as we speak. The forecast for the first quarter, top and bottom line, disappointing. At the same time, it's talking about the CEO saying demand is quite strong, says the chipmaker missed a lot of opportunities, says production yield is not up to his standards. And then he goes on to say making, or Intel says, the company making good progress in 14A production, on track for volume production in 2028, has multiple engineering engagements on 14A. Help me understand what that means.

6:05These are different chips, the 14A, the 18A, and the announcements that they made earlier this month at the CES. They got their latest semiconductors on track to go into production. To me, a huge demand for all semiconductors is outstripping supply. There's, in fact, concerns of memory shortage and processor shortage. So the demand wind is a tailwind. And they are back to innovating and developing and winning customers and working with key computer manufacturers, key hyperscaler, cloud service providers. And I think that they got a tremendous tailwind. The stock ran up a lot. It went from 20 to 55.

6:53Even if it pulls back to 45, it's a buying opportunity. because I think that long term, they are going to be back. I mean, I don't think even be back to their former glory. I think they are going to be one of the world's leading semiconductor developers, designers, and manufacturers.

7:12Carol Massar:So the Foundry Services Division, their factory unit, revenue of about$4.5 billion. It was a gain of about 3.8%, Ivan, from the year before. It currently relies on almost exclusively, as you know, Intel product divisions for orders. It's looking to expand beyond that. Is that crucial for the company's future growth? It's crucial, but that is the opportunity to work with everybody because you got to realize that most of the other semiconductor companies, even NVIDIA, Apple, all of the companies like Google, Facebook, Amazon that want their own processors, Qualcomm, They're all virtual manufacturers.

7:54They don't actually manufacture. They outsource to companies like Taiwan Semiconductor and hopefully companies like Intel to manufacture their processors.

8:03Carol Massar:You know, is the U.S. the U.S. is, at least from an investment perspective, things have kind of quieted down a little bit since this summer. But are there any other companies, particularly companies within your universe that you follow, that could see, in your view, an investment by the U.S. government?

8:23You know, that I don't know. The other companies that I like in the semiconductor sector are NVIDIA and Qualcomm. And, you know, NVIDIA is pretty flush. Yeah, they don't need.

8:34Carol Massar:I don't think they could they could make an investment in the U.S. government. Yes. I really think it was great how it turned around after the meeting with Trump and Tan that Trump wrote a check. And also we have a lot of government incentives to build semiconductor manufacturing capacity here. We have projects in Arizona, projects in Ohio. So ideally, the U.S. could be the semiconductor manufacturing capital for the world. So in terms of going back to, and you rightfully so, Ivan, point out the run-up that we've seen in Ivan shares and Intel shares. You know, the information put out a story and it says Intel's forward EBITDA multiple has lifted to 20 times highest level since 2021, well above the 12 and a half times at which TSMC currently trades.

9:31Carol Massar:This is what I was trying to get to before with our simulcast. I was talking market caps, but it has to do with valuation. Intel now pricier than TSMC. Does that make sense? Well, I always say I wish we could solve the mysteries of the stock market by dividing two numbers, like cash flow or even PE. Stocks go up for everything that you really can't measure. And this is about Intel's future. So we are going to see, if all goes well, a huge ramp up in revenue, in expansion in margin, an increase in cash flow, and then an increase in profitability. So I think their foundry business will ramp up significantly.

10:11And as their new processors come to market, revenue and cash flow and profitability will ramp up, also ramp up significantly.

10:19Carol Massar:Yeah, Liputon saying, you know, Intel faces an execution challenge. We are laser focused as a team to improve that. To be candid, it's just our execution that needs to improve. Ivan Feinseth, great stuff as always. So appreciate it. He's, of course, Chief Investment Officer over at Tigris Financial Partners, joining us on Intel. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

11:08it's just getting good. Visit lifemd.com slash good life. You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app

11:26Carol Massar:or watch us live on YouTube. The World Economic Forum in Davos. I heard of it. Okay. He's called it, quote, boring. He slammed the group as a body that's increasingly becoming an unelected world government that people never asked for and don't want. So he's like, I'm never going to go to that thing. That's ridiculous. Why? Like, who would waste their time there? The he we're talking about is Elon Musk. Correct. Those are things that he said about the World Economic Forum in the past. Yet today, for the first time, he made an appearance. He showed up, didn't he? He showed up and he made some news.

11:57Carol Massar:Do you think he was like, hey, it's Elon. I've been busy at the factory, but I'd like to come to Davos. I don't know how it works. He was confirmed at the last minute addition for a Thursday afternoon session. He spoke to BlackRock CEO Larry Fink. Here's just part of that conversation. We do have some of the Tesla Optimus robots doing simple tasks in the factory. Except probably later this year, by the end of this year, I think they'll be doing more complex tasks. And it's still deployed in an industrial environment. and probably sometime next year, I'd say, by the end of next year, I think we'd be selling humanoid robots to the public.

12:46That's when we are confident that it's very high reliability, very high safety, and the range of functionality is also very high. You can basically ask it to do anything you'd like. You're already seeing that in Tesla cars. is the software changes that you're doing. And what is it, every quarter now a software change that upbrates the ability of the robot within the car? Yes, the Tesla full self-driving software, we update it sometimes once a week. And recently some of the insurance companies have said that it is actually so safe, Tesla full self-driving is so safe that they're offering customers half-price insurance if they use Tesla full self-driving in their car.

13:35And that can be monitored by the insurance company? Is that part of the agreement? Yeah.

13:42But I think self-driving cars is essentially a solved problem at this point. Right. And Tesla's rolled out a sort of robo-taxi service in a few cities and will be very, very widespread by the end of this year within the U.S. And then we hope to get supervised full self-driving approval in Europe, hopefully next month. Really? That quickly? Yeah. And then maybe a similar timing for China, hopefully.

14:19Carol Massar:Well, there you have it. That was Elon Musk, along with Larry Fink, the CEO of BlackRock. For more on that appearance at Davos, we're joined by Max Schaffin. He's Bloomberg Businessweek senior reporter. He's co-host of the Everybody's Business podcast. He's also the author of The Contrarian, Peter Thiel, and Silicon Valley's Pursuit of Power. He joins us here in the Bloomberg Interactive Brokers Studio. A lot of timelines laid out just in that two and a half minutes. And that was just part of what he said today. I know you're excited, Carol, for the Optimus robots to be sold next year. I'm already creating a bedroom for one at my home.

14:52Carol Massar:They don't need a bedroom. That's what we're worried about, though. Just got to plug them in, right? Charge them and then they just do the dishes. Don't eat. Is that a realistic thing based on your observations of Tesla and where they are right now with these Optimus robots? I don't think it's a realistic thing for any humanoid robot, whether it's Elon Musk's humanoid robots or not. I mean, there are prototypes of these things, but of course, it's a big jump from going from a prototype to putting these in environments where unpredictable things have happened. That's the reason why Elon Musk for 10 years or so has been saying self-driving cars are going to happen next year, and we're still not quite there yet.

15:31There was a demo today in Austin, another demo. But again, these are very controlled. We're not seeing the kind of mass, you know, mass market adoption, unsupervised kind of robotics that Elon Musk had been talking about and that we're all, you know, frankly hoping for. It would be nice to have a Dishes Doing robot in our home.

15:52Carol Massar:Do it all. Take the garbage out and everything. But, you know, it's interesting. We had a conversation with Hannah Elliott today, the auto columnist here. It'll be in our weekend show. It will be in our weekend show. And she recently went out in a Mercedes that has kind of their two different programs, really, when it comes to self-driving. And she was blown away. But it doesn't, she drew a distinction for us. And I'm, you know, giving a preview for our conversation that is Saturday. There's a distinction between Mercedes technology that runs on NVIDIA and Tesla's technology for FSD, which is fully supported by cameras.

16:25Carol Massar:Mercedes technology that she writes about has the cameras, but also additional sensors. It's more akin to a Waymo. Right. Yeah. Waymo is betting on this. And as you said, many other people are betting on these kind of multi-sensor approaches. There are a lot of critics of Tesla, including some very strong critics who basically say this is impossible. Elon Musk's argument has been all along, hey, you drive with two eyes, therefore cameras should be fine. I don't think we know the answer to that question That is The argument he makes I will say the brain As challenging As a lot of interpersonal Relationships are, the brain is so Powerful when it comes to making these split second Decisions that haven't yet been I mean, Elon just now And yet the brain causes us to often Get distracted by picking up our phone Or reaching and doing things So who, I don't know Well, I mean, I do think that, and Musk made the point about insurance rates and full self-driving.

17:28Right. We are seeing, whatever your view is in terms of the realistic nature of these kind of robo-taxi timelines, we're seeing huge advances in driver assistance. And that is where Elon Musk, to his credit, he doesn't talk about it this way, but if you just see Tesla's autopilot and full self-driving as a driver assistance system, You know it's pretty promising you do have to be engaged have to be looking It's not a substitute for for your own eyes and your own judgment But it could augment that process and and you're seeing kind of a distinction in terms of how some are some automakers are Sort of focusing on that path while others are going the kind of Waymo You know full self-driving route musk I think is essentially keeping both options open And he has the sort of robo-taxi demo in Austin, but also there are many normal cars with this software built in.

18:21Carol Massar:I guess, and I think part of the reason I brought up Hannah is just how she was blown away, I think, by the technology and how great it was. And I just think about, we talk about these robots. Could they possibly, though, I'm looking at advancements in technology, AI, moving along pretty fast, that it could actually happen sooner rather than later? I mean, anything's possible. But even, you know, Elon Musk even talks about this. There is this thing where getting 99 % of the way is very easy. And that last 1%, no one quite knows just how it is. And we're talking again about big, heavy machines, industrial robots.

18:59There are very advanced industrial robots in factories that can do, you know, fine motor skills. But the factories have, you know, yellow tape around them because you don't want to get too close to the robot because these are heavy machines. They could hurt somebody. And there's going to be a very high bar before putting one of these optimists, optimi, in your home. It's not, especially, it not only has to do the dishes, it has to be better than your current dishwasher.

19:23Carol Massar:We'll see what the consequence is if you do not call it by the proper name. And if they don't stack the dishes the way I like it, there's a problem. Talk about relationship challenges. The self-driving car is a solved problem, is what Elon Musk said to Larry Fink earlier today. Okay. Maybe from a technological perspective, it's a solved problem, but you're only seeing Waymos in a handful of cities. The robo-taxis from Tesla are only available in a handful of cities. Is it a solved problem in your view? No. It's obviously not a solved problem. It'll be a solved problem when we all have self-driving cars.

19:57But, you know, if from the point of view of Elon Musk, from the point of view of Tesla investors, they have a big lead, Elon Musk, in his mind, they are just going to get there, You brought up the why is he going to Davos right now? I think part of the reason he's going to Davos is because a lot of eyes are on Davos because Donald Trump was there. Elon Musk is really good at figuring out where the news cameras are pointed, where the kind of conversation is and putting himself there. So he's going there and he's talking his book. He's talking about driverless cars while there's a lot of focus on this conference.

20:30Carol Massar:But having said that, too, coming off of CES 2026, right, we talked, too, about the focus on robots or robotics. And it does feel like that's where the world is going next. Oh, yeah. There's definitely a lot. I mean, there's tons of investment here. And part of the reason is there are these amazing advancements in AI, and yet we haven't quite figured out how to commercialize them. So there are all sorts of efforts to find a commercial way to make money on this thing. And, of course, humanoid robots are one of these options. There are lots of humanoid robot companies in China right now that are also racing to compete with Optimus.

21:07Carol Massar:So mission accomplished for Elon at Davos. We're talking about he made he made a lot of news. A lot was written about him. We're talking about him right now. He got the attention. But he could do that anywhere he goes. It's true. Although I think he likes to, you know, put himself at the center. And again, I mean, Davos has in a way that that's hard for me to remember. It's been been a few years where with Trump making these Greenland threats and flying there, there was just so much attention on this thing. And it almost feels like Musk is trying to get himself back close to Trump as well. I think they just passed ships in the night.

21:43But it's hard not to see their proximity is getting closer. They didn't fly there together. No, not yet.

21:50Carol Massar:Not yet. Having said that, we wrapped up the year doing a really fun conversation with you, like kind of the Elon year in review 2025. Because there was a lot, if you think about when President Trump came into the White House and Doge. How are you thinking about Elon this year right now? Well, I think the big question on the business side is SpaceX and the possible SpaceX IPO. I mean, we're going to see a lot of companies try to do IPOs, I think, in the next year or so for lots of reasons. You say possible. Is it a given or we shouldn't assume that it's definitely going to happen? I mean, it hasn't happened.