Is Intel Stock a Buy Now?

Semiconductor giant Intel ( INTC -1.61% ) is undergoing a tumultuous time in its storied history. Despite competitors such as Nvidia seeing surging sales amid the artificial intelligence (AI) boom, Intel is struggling.

Sales suffered a 2% year-over-year drop to $53.1 billion for Intel's 2024 fiscal year, ended Dec. 28.



The firm has been struggling to perform for some time, which led to the ouster of CEO Pat Gelsinger last year. Lip-Bu Tan took over the CEO spot in March. Now, Intel stock's price-to-book (P/B) ratio hovers around a multiyear low.

This suggests the shares may be undervalued. So is now the time to scoop up the stock? Here's a deeper look into the company to find out. How Intel's business is doing now Intel's P/B ratio is 0.

8 at the time of writing. A value less than 1 indicates its stock price is trading below its book value . This means Intel shares are valued less than all of its assets.

Intel exited fiscal 2024 with total assets of $196.5 billion, compared to total liabilities of $91.5 billion.

Its semiconductor manufacturing operations comprised more than half of its assets. But this part of its business is also what's dragging down its financial results. Intel's foundry business is struggling.

In fiscal 2024, this division's sales fell to $17.5 billion from $18.9 billion in fiscal 2023.

On top of that, costs went up, and combined with lower revenue, resulted in an operating loss of $13.4 billion in fiscal 2024, nearly double the prior year's loss of $7 billion. Under Gelsinger, the foundry division was intended to be a key component of Intel's long-term strategy by competing with rival manufacturers, such as Taiwan Semiconductor Manufacturing , popularly known as TSMC.

Among semiconductor companies, TSMC is second only to Nvidia in terms of market cap . With its foundry operations flailing, Intel's bread and butter comes from its PC products, which falls under its client computing group. The division generated $30.

3 billion of the company's $53.1 billion in fiscal 2024 revenue, up 3.5% from the prior year's $29.

3 billion. In fact, all of Intel's products produced year-over-year revenue growth, collectively generating $48.9 billion in fiscal 2024 compared to $47.

7 billion in the previous year. Intel's foundry prospects Despite the sales growth of Intel's products, taken together with the sagging foundry operations and restructuring costs related to expense cuts, the company suffered a net loss of $19.2 billion in fiscal 2024.

That's a dramatic plunge from fiscal 2023's net income of $1.7 billion. Adding to this, the firm's poor financials caused Intel to suspend its dividend in a blow to shareholders.

Management now intends to focus on improving the foundry business and strengthening Intel's AI offerings. This makes sense, given the growing importance of AI to the semiconductor sector, as well as Intel's $8.5 billion in funding anticipated from the federal government to support U.

S. manufacturing. In addition, Intel's foundry business captured customers such as Microsoft , as some tech firms seek to build custom semiconductor chips designed for their business needs.

This creates an opportunity for Intel to grow its manufacturing sales. Tan stated his goal is for Intel to "establish ourselves as a world-class foundry." Weighing whether to buy Intel stock But the lingering question is whether Tan can turn around Intel's floundering foundry business, and that uncertainty has weighed on the stock.

Another factor to consider is Intel's share price valuation. Yes, Intel stock sports a low P/B ratio, but comparing its return on equity (ROE) to competitors Nvidia and TSMC paints a picture as to why Intel's share price is so low. Data by YCharts .

For the past several years, Intel's ROE steadily declined while the competition prospered. Nvidia, in particular, benefited from the AI boom. This indicates investing in Intel has led to poor shareholder returns over the years.

With a new CEO, Intel may finally pull off the turnaround that's eluded it so far, but it's going to take time. If you have faith Intel can execute a rebound and you're willing to wait, potentially for years, then now is a good time to buy shares, given the low valuation. But semiconductor competition is fierce, and if you're on the fence about Intel's future prospects, a measured approach is to see how the semiconductor veteran performs over the next few quarters under Tan's leadership.

You're looking for the company to get its costs under control, and return to year-over-year revenue growth. Until then, it may be prudent to hold off on an Intel investment right now..