Intel stock: These are the key investor debates

Investing.com -- Intel (NASDAQ:INTC ) remains under pressure as several key investor debates continue to swirl around the company's long-term outlook.

According to Bank of America analysts, who maintain an Underperform rating with a $21 price target on the stock, Intel faces "a unique confluence of competitive, financial, and strategic threats" with no immediate positive catalyst on the horizon.

One of the biggest questions concerns Intel's manufacturing capability, according to the bank in a note.

They explain that the company's reliance on external foundries, such as TSMC, has grown as its ambitious "5 nodes in 4 years" roadmap struggles.

Intel's success in developing its 18A process is seen as critical to its turnaround, but "so far, there has been no external proof points of success," according to BofA.

The company's recent deal with Amazon (NASDAQ:AMZN ), which some saw as a win, was described by BofA as "a framework with no guarantees of any revenue."

Another debate centers on Intel's talent retention, especially in light of frequent restructuring.

BofA highlights that Intel's revenue per employee, at $454,000 per year, significantly lags behind competitors like Nvidia (NASDAQ:NVDA ), AMD (NASDAQ:AMD ), and TSMC.

They believe it suggests that the company may face challenges in retaining and attracting top talent, which could further hinder its recovery efforts.

Free cash flow (FCF) generation is also a pressing concern. Intel's high operating and capital expenditures are expected to remain elevated, with BofA warning that the company "would not work without a credible gross margin path to 50%+."

Intel's current debt load of $53 billion adds further pressure on its ability to generate meaningful FCF, said BofA.

Lastly, the bank says Intel's position in the x86 CPU market is being challenged by the rising adoption of ARM processors in PCs and servers.

BofA notes that ARM's market share in PCs could triple by 2028, further eroding Intel's dominance.

Source: Investing.com