INTC Earnings Grows, Signals Long-Term Turnaround as CapEx Climbs

4% following that earnings report. So I want to bring in our panel to take a closer look here. Joining us, Michael Robinson, tech analyst and Sean O'Hara, president of pacer ETFs. Great to have you both with us. Michael let's start with you. I mean we saw the fastest revenue growth in 15 years. We beat earnings by almost two X strong guidance. We're still seeing a sell off here. What happened. It's not a great day for tech in general. But I think that this proves a point that I was going to make today, which is that the Intel story is largely over. That stock seems to be played out. I would not initiate a trade right now in Intel. There's other other things I like better. The thing with Intel is it's had a great year, as you mentioned, for the stock. But over the last three years earnings have been pretty meaningless. It's been really earnings growth. When you see a stock move like that, especially in old line name like Intel, which has been around for decades in Silicon Valley, has been a giant for decades. I think most of the big money has been made. I would be very reluctant to issue to start a trade in that stock today. Maybe if you could get it at a stupid, cheap price and you really, really, really believe in it for the long haul. But I, it's something I, it's at best it's a hold. I would not make its best. At best it's a hold. It's probably a sell. And Sean, what's your thought on what Michael just said there is the Intel trade played out or were the numbers they put up enough to keep some optimism behind it? Well, I mean, I think in the short run I probably would be agreeing. I mean, especially when you see a stock up that much, right. You know, trees don't grow to the sky, so to speak. But if you were to extend your time horizon, you have to keep in mind that the plant here in the US is not online yet, and it will eventually come online. I think the AI spend is real. We own a lot of the chip names in several different ETFs here, but we actually own everything inside a data center, from chips to hardware to software to networking to cooling systems. We call this a big spenders versus receivers trade. The spenders are the hyperscalers. They're not slowing down, and the receivers are everybody that provides all of the equipment inside of the data center. And Intel's a part of that. So, you know, depending on your time frame, if you're if you own it, you should continue probably to hold it. I own it personally, and we own it at our firm. I'm not sure I would be putting a big position on if it got a little bit weaker, I probably would, but if you're looking at the next 3 to 5 years, I think you can get better than market returns out of Intel. I don't think you're going to triple your money in the next five years, but I think there's still room for the to the upside on the stock over that time frame. And Michael, let's talk about some of the the potential ways that we see some of that upside here. Data center business grew 59% last quarter. As you look at that number. Is Intel proving or trying to prove that it is becoming a meaningful AI infrastructure player? Or as one quarter simply not enough? One quarter is not enough. But I do agree for the long haul it's probably good, but the AI trade is is, is very expansive. So it's not just chips, it's cooling companies like Vertiv and stuff like that. Another company I really like in the AI data center space is comfort systems Hvac. Who would have thought that Hvac would be an AI play? If you told me that 3 or 4 years ago, I would have laughed at you. So that's a that's a good play in data center chips. I think that AMD that's a stock I've mentioned several times on your shows, and I still like it because it's just racking up one major win after another in the AI world. Oracle. Anthropic, OpenAI, Microsoft if it wins from all of those companies. So basically everybody who's big in AI seems to be beating a door to beating a path to AMD's door. And Sean, as you look at the spend, you know, that seems to be a focus here of this entire earnings week. Arguably, this earnings season even likely will be with the names we haven't heard from yet. But we saw similar reactions with Alphabet and Tesla. We saw this sort of we need to spend it now and we'll prove it to you later. Sort of thesis from these companies. As you look at the reaction to alphabet. And I guess we can include Tesla in this conversation, should they be viewed differently from Intel or should that spend it now? Prove it later thesis just be looked at in one bag. Well, several years ago, we built an ETF. The ticker is TRFK, basically owns everything. That vertiv is a name that the previous guest said. You know, there's so much more to the AI build out than just data centers and chips. And so we took everything inside of that data center and it's hardware, software networking, it's cybersecurity, it's cooling, as was mentioned earlier. I think that's the better way to deal with what's going on in the market. I think the hyperscalers are going to spend the money. I just don't know whether they're going to receive the return that everybody would expect, or what people would say would be a reasonable return. So in this environment, I'd probably be shifting money away from the hyperscalers and towards the people who provide all of the equipment that will make AI a reality down the road. And, you know, you know, most people miss a lot of it. Like cybersecurity is a big deal. Yes. These these things need to be cyber fortresses, the cooling piece of it, almost half of the energy cost in a data center is going to be to cooling systems, because if anybody's ever charged their iPhone in and you pick it up afterwards and it's a little bit warm, you know, imagine a building three football fields long with rack and rack and rack of server in it and how much heat that would produce. So they have to keep these things cool. And I don't think anybody's really caught on to that piece of the bottleneck, if you will. So we would rather own the people that are going to be the receivers in this trade, and we probably would be taking money away from the spenders and let them prove it down the road, whether or not they're actually going to be able to monetize this big spend. We've had a lot of conversations about the check writers and the check cashers, and if we would start to see them start to converge again, but it doesn't look like it's going to happen this quarter. Michael, as you look at Intel, I mean, you've both been pretty clear that you aren't actively investing in it right now or putting any more money into it. What would Intel have to prove for you to become more constructive here? I'd like to see more consistent earnings. I mean, this quarter, as you noted in the opening, was I mean, that was a great summary, by the way, Marley, that's one quarter. We missed the trade. I mean, I, I don't think anybody would have predicted how much it would have gone on fire from like what, March 30th or April 1st. I'd like to see more consistent earnings. Remember, there's no dividend. So why am I buying this stock. My question is always why does stock buy now this is not a good time as I've already as I've already noted, but I would like to see some more consistent earnings. Basically no earnings growth for the last three years. Negative to to zero. I it's a it's a what have you done for me lately. Kind of a world out there on the stock market. And I would like to see a lot more consistent earnings to get me interested in buying Intel after its enormous run. All right. Time will tell for Intel. But down three and a third percent