Intel CEO Pat Gelsinger calls the company the “next big growth story”
CEO Pat Gelsinger said Thursday that the chipmaker could be the stock market’s “next big growth story.”
The comments came during an analyst meeting in San Francisco where Intel said it plans to increase its annual revenue growth to the 10% to 12% range by 2025. the company fell 4% in 2021.
Gelsinger said Intel (ticker: INTC) expects overall low-single-digit revenue growth this year, accelerating into the mid to high numbers over the 2023/2024 period, reaching the low to double digits in 2025 and 2026.
Gelsinger presented an overall bullish view of the company’s six business units. He wants Intel to double its earnings over time, while leading to a doubling of the company’s price-earnings multiple, a potential “double-double” to quadruple the stock’s return.
“Intel’s revolving train leaves the station,” he said.
Chief Financial Officer David Zinsner provided additional details in a later session, forecasting revenue of $76 billion for 2022, with earnings of $3.50 per share, gross margin of 52% and a negative free cash flow of $1-2 billion and $27 billion in capital expenditures. . Wall Street analysts expected $75 billion in revenue and $3.54 in earnings per share.
Intel shares were down 1.5% in after-hours trading Thursday, after slipping 1.4% in the regular trading session.
Gelsinger forecasts low to mid-single digit year-over-year growth of the core personal computing process market over the period 2026. It forecasts growth of the data center segment in the mid-to-high range at a figure through 2023, accelerating through mid-teens by 2026. It forecast mid-teens network and edge computing market growth through 2026.
Gelsinger predicts substantial growth in the company’s graphics and accelerated computing market, where Intel will face
(NVDA) on gaming, high performance computing and artificial intelligence applications. He expects this segment to approach $10 billion by 2026, up from $700 million in 2021, with the total exceeding $1 billion in 2022.
Gelsinger did not provide detailed advice on the Mobileye automotive segment of the business, given the company’s plans to spin off from the business later in 2022; but he says work on the IPO is well advanced.
For Intel’s emerging foundry business, Gelsinger said the company has the potential to show dramatic growth by 2026, starting at $900 million in 2021, but he didn’t give a forecast. income details. He noted that the recently announced acquisition of
accelerates the company’s entry into the foundry market. Zinsner said the company expects high single-digit growth in the foundry business by 2026.
The CEO also said Intel’s “moonshot” approach to chipmaking envisions a sharp reduction in global reliance on Asian chipmaking to 50% over the next year. by 2030 compared to 77% in 2020. It targets Europe’s contribution to chip manufacturing in 20 years. % of global total by 2030 from 9%, with US increasing to 30% of total from 12%. Intel itself has announced new factories in Arizona and Ohio.
Gelsinger said he sees the global semiconductor industry doubling to $1 trillion in revenue by 2030. He also said “Moore’s Law is alive and well,” with components individuals going from 100 billion transistors to 1,000 billion in 2030.
Zinsner said the company is targeting gross margins of 54% to 58% in 2025 and beyond, growing from 51% to 53% through 2024. He also said the company is targeting free cash flow of 20 % as a percentage of revenue by 2026, compared to neutral free cash flow over the periods 2023 and 2024.
Zinsner also said the company is adopting a “smart capital strategy,” using government incentives, customer prepayments and partner funding to offset at least 10% of the costs of the company’s fab-building strategy. He expects capital intensity – capital expenditure as a percentage of revenue – to reach 35% over the 2023 and 2024 period as the company builds new factories, then to fall back to around 25% in 2025 and beyond.
Write to Eric J. Savitz at [email protected]