Gene Munster Saw This Intel Rally Coming

I think the first takeaway if you're a Intel investor, you got to be counting your blessings. Even with the stock up 5% here, understand that they guided revenue up 11% for the September quarter. And there's a lot of good news around 14A, which is a driver in 2028. But objectively, they just raised capex from 15 billion where the street was at for this year to 20 billion. They said next year will be significantly higher. That has been the tagline for stocks going down. you saw the stock start to trade down in the after hours in anticipation of those comments and it's kind of hanging steady at that. So largely I think that uh that this company still is moving in the right direction but I there's just so many better companies to invest in the infrastructure. The other big takeaway here outside of the the call is just the big picture here is this is yet another statement about how early we are in AI and I just want to kind of frame that in is what Intel basically does is they sell accessories to the AI uh infrastructure build. Uh these are CPUs. This is old technology. They've been updating it but it's still old when it compares to GPUs. And the hottest segment their their best performing segment that data center and AI segment uh is 113th the size of Nvidia's GPU business. It grew at 56%. Nvidia is going to grow their GPU business at 96% in the July quarter. So U Melissa when I just put all this together I'm surprised that the stocks up call it 12% over the past week. Google's down 8% and the NASDAQ's down 1%. It just feels like a gift. and and throw in the fact that Nvidia trades at a fraction of the Ford PE that Intel is trading at right now to add insult to injury. I mean, but Gene, when you when you think about why Intel is not going down on significantly higher capex, I mean, the takeaway here is that investors believe that the dollar spent by Intel is going to have a bigger or faster return than the dollar spent by Alphabet. Do you think that's the correct takeaway? I I think it's the right takeaway that there a dollar spent in capex is going to be a beneficiary. I've been applauding the the rise in capex over the past couple years. I've been puzzled by the market's reaction to what we saw last night from Tesla and Google and just broadly. So I think it is I I don't think these companies should be penalized for this capex spend. and and part of the reason is if you believe like I do that we are still so early in the third inning infrastructure is going to be a competitive advantage. So are they I I don't have a good answer of why investors are believing that they're going to be a better fiduciary of capex versus uh Google for example but I think the whole concept of more capex for these companies that are leaders and until still is at the little kids table by the way they haven't really graduated to the big boys table big big table the adult table and uh but ne nevertheless I think that this is uh still the right move for them to invest in that capex >> Mel brought it up gene why Why does Nvidia given all the metrics you decided, why is it traded at the I mean it trades at less than a market multiple and obviously a lot cheaper than to the extent it even has peers it's peers. >> Yep. So to just frame that in on the 2027 numbers Intel trades at 61 times and you have Nvidia trading at 17 times. AMD as a point of reference trades at 31 times. And guy the reason is is that's that 13x number that I gave that that business is 13 times bigger even though it is growing faster. When you have numbers that are just that staggering, it is almost impossible for investors to get over that we're going to see a big slowdown. At Deep Water, we sold Nvidia a couple months ago, big believers in all they're doing. But we just felt like this was going to be continued beats, but the stock would not be rewarded. And I think you're seeing that in Nvidia shares. And maybe that's what's going on with Intel here is it's still a relatively small business and and directionally has probably more room for upside. That's why you pay that higher multiple. 14A is going to be a big deal.