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Read Replies (1) | Respond to Intel Stock May Have Bottomed at Tangible Book ValueShares of chip maker Intel, described as “unownable” by one analyst, are priced for the company’s lights to be shut off. That’s an unrealistically dire outlook.Andrew Bary Intel stock has gotten so cheap that it now trades around tangible book value. The shares, which are off 4.7% Friday to $19.53, change hands at right about their tangible book value, which Barron’s calculates at around $19.50 per share. It’s rare to find a major company—technology or otherwise—trading around tangible book value, because the measure approximates liquidation value, and most big companies are worth considerably more than an operation ready to turn off the lights. Shares of peers Advanced Micro Devices and Nvidia trade for more than 15 times and 50 times tangible book value, respectively. Both AMD and Nvidia are much more profitable than Intel, however. Intel may be near a bottom. The stock hit a recent low of just under $19, and tangible book value could prove to be a floor for the share price. Tangible book is a conservative measure of book value that strips out goodwill and other intangible assets. Barron’s calculates Intel’s tangible book at around $83.4 billion, the same as its market capitalization. Intel’s valuation relative to tangible book was noted on X recently by Rihard Jarc, co-founder and chief investment officer of New Era Funds Most of Intel’s assets—over $100 billion—are its semiconductor plants that are classified under plant, property and equipment. The company has net debt (short- and long-term debt less cash and equivalents) of more than $30 billion, and its credit rating was just downgraded to Baa1 from single-A3 by Moody’s, which cited weaker profitability. Intel’s stock has been hammered this year, falling over 50%, and a good chunk of the drop has come recently. The company offered more bad news in its second-quarter earnings report on Aug. 1. Adjusted profits of two cents a share missed expectations for earnings of 10 cents, and the company offered weak guidance for the third quarter. Intel, which is spending heavily on new plants, also eliminated its dividend. In our Tech Trader column last week, Tae Kim wrote there is some hope for Intel as it launches a new processor line in 2025 called Panther Lake that could be more competitive with those from rival AMD. A morning briefing on what you need to know in the day ahead, including exclusive commentary from Barron's and MarketWatch writers. Subscribe Now Kim called Intel one of the country’s “most important strategic assets.” The U.S. will need Intel if it wants to reduce its dependence on Asian chip manufacturing, he noted. Despite the grim headlines, Intel is expected to earn 25 cents a share this year, about $1 a share in 2025, and nearly $2 a share in 2026. Those estimates could prove optimistic but the company is not expected to operate in the red. Sentiment is still poor on Intel. There are only about nine Buy ratings on the stock among about 50 analysts who cover it, and one recently called it “unownable” for now. But when a stock becomes “unownable,” contrarian investors should check it out. Intel stock, at current levels, offers a favorable risk/reward for investors. Intel’s market value of $87 billion is dwarfed by rival AMD at over $200 billion, Broadcom If the company weren’t so strategically important to the U.S., it might be a takeover candidate. Investors can now buy the stock at about where it traded 25 years ago. There are few if any major tech companies like that. CEO Pat Gelsinger, as he has a number of times, just bought the Intel stock dip , paying about $250,000 for 12,500 Intel shares, about $20 each, on Aug. 5. Write to Andrew Bary at andrew.bary@barrons.com
