Episode Details

Intel Corporation (INTC) Q2 2026 — Intel Corporation (INTC), mid-turnaround under CEO Lip-Bu Tan, reported a blockbuster Q2 2026: adjusted EPS of $0.42 doubled the ~$0.21 estimate on revenue of $16.1B (+25% YoY — its fastest growth since 2011), gross margin inflected to 40.4% (+13 pts), and guidance topped the Street. Client (CCPG) rose 13% to $8.9B and Data Center (DCAI) surged 59% to $6.3B, together earning ~$4.8B of operating profit. The stock popped ~12% after hours to ~$112. Yet GAAP showed an $11B loss — entirely a non-cash $12.5B mark-to-market on shares Intel owes the U.S. government (a liability that grew because the stock tripled); strip it out and Intel earned $2.2B adjusted on $7B of operating cash flow. The catch: Intel Foundry still lost $2.1B (~$8B/yr) with no break-even date, adjusted free cash flow was ~-$8B, the dividend is suspended, and at ~9x sales the stock sits above the Street's ~$107 average target. Our scenario value lands near $90. Our call: HOLD. Intel is the great fallen giant of American technology — the company that defined the PC era, then spent a decade losing its manufacturing lead to TSMC and the AI wave to Nvidia, watching its stock crater near $19. Under CEO Lip-Bu Tan, and now with the U.S. government as a CHIPS Act shareholder, it is mounting a real comeback, and Q2 2026 was the best evidence yet: revenue +25% to $16.1B (the fastest growth since 2011), adjusted EPS of $0.42 (double the estimate), gross margin up ~13 points to 40.4%, and a raised outlook. The profitable products business — Client CPUs +13% and Data Center +59% — earned ~$4.8B of operating profit, while the money-losing Intel Foundry finally narrowed its loss. The scary $11B GAAP loss is a paper charge — a non-cash mark-to-market on shares owed to Washington that grew precisely because the stock tripled — so operations were actually profitable ($2.2B adjusted, $7B operating cash flow). So the turnaround is real. But the stock has already five-bagged to ~$112, trades at ~9x sales (roughly 3x its historical multiple), the foundry still bleeds ~$8B a year with no break-even date, real free cash flow is negative, and the dividend is suspended. Even giving full credit to the recovery, our scenario value lands near $90 — below the price, and below the Street's ~$107 average target. Our call: HOLD, 3/5 — a genuine comeback whose stock has already run past it. Add on real weakness toward the mid-$70s, and watch Intel Foundry. Not financial advice. THE CALL: HOLD (3/5, A REAL TURNAROUND, ALREADY PRICED — A BLOWOUT QUARTER WITH NO MARGIN OF SAFETY) — base-case value ~$90 vs ~$112 today. KEY METRICS: - Revenue $16.1B, +25% YoY (fastest since 2011); beat ~$14.4B est - Adjusted EPS $0.42 vs ~$0.21 est (2x); GAAP EPS $(2.16) on a non-cash $12.5B charge - Gross margin 40.4% (+13 pts YoY); Q3 guide revenue $15.8-16.8B, adj EPS ~$0.38 - Segments: Client $8.9B +13%, Data Center $6.3B +59%, Intel Foundry $5.8B (-$2.1B op loss) - Cash: +$7.0B operating, capex $2.7B, adjusted FCF ~-$8B; dividend suspended; ~$30B liquidity vs ~$50B debt - Our fair value ~$90 (bear ~$50 / base ~$90 / bull ~$145) vs ~$112; Street Hold, ~$107 avg What to watch: hard evidence Intel Foundry is nearing break-even — outside customers committing to the 18A/14A nodes and gross margin marching back toward 50% — which would unlock the compounder path north of $145 and prompt an upgrade; the risks to respect are foundry losses that simply persist, AI-server share ceded to AMD, Nvidia and Arm, or the U.S. government stake souring, any of which could re-rate a ~9x-sales stock back toward $50 Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.