Intel's Multiple Q3 Headwinds Likely to Persist for Several Quarters; Lowering FVE to $45

Intel’s third-quarter results were negatively affected by weaker end-market demand, competitive pressures, and ongoing execution issues leading to continued market share loss and margin compression. Management announced an assortment of cost-reduction efforts aimed at $3 billion in cost savings in 2023, growing to $8 billion-$10 billion annualized by the end of 2025. We believe certain noncore businesses such as Intel’s graphics segment will see reduced head count. In addition to a weaker PC market, we expect Intel’s data center business to continue suffering share loss to AMD as the former’s Sapphire Rapids server CPU is delayed until early 2023 and AMD is set to launch its latest its 5-nanometer-based Genoa server CPUs later this year.