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Comment by nightski | Hacker News Reader

I'm not saying you are wrong but personally I'd view the stock as an attractive perk right now since it is so low.

Whereas if I were joining a company such as Nvidia I'd honestly be kind of worried.

Historical performance isn't really a great indicator here.

You can trade your stock for intel stock when working at any company. Stock grants really should be swapped for income and reinvested how you see best. So ultimately the total take home income is what should matter for any new hire. Take the higher paying and job and buy intel stock if you believe it’ll rise.

Most stock vests over time though. I can't trade it immediately, and the value may drop between when I get the grant and when I can actually sell the shares.

He’s saying ignore the potentially worthless options and invest that extra 50% salary you earn at elsewhere in Intel stock instead of working there.

Intel stock is as high as it was 15 years ago when they had total market domination. Now they are at the brink of collapse. The market is way bigger today but still, I would take a dominant player over a failing one every day.

Another way to look at it: Intel market cap is 83B, AMD's market cap is 228B. Do you think Intel is expected to make 1/3 of the money AMD is going to make in coming decades? I see no reason to be as optimistic.

> Another way to look at it: Intel market cap is 83B, AMD's market cap is 228B. Do you think Intel is expected to make 1/3 of the money AMD is going to make in coming decades? I see no reason to be as optimistic.

Nit: market cap is not earnings. That's stock price * shares outstanding.

This year's earnings looks like this:

Intel, 3 months ended: Jun 29, 2024

> Net income (loss) (1,654)

https://www.intc.com/news-events/press-releases/detail/1704/...

AMD, 3 months ended: June 29, 2024

> Net income (loss) $ 265

https://ir.amd.com/news-events/press-releases/detail/1209/am...

So Intel lost 1654M and AMD earned 265M. This only makes your point stronger.

Yeah but market cap is at least in theory about how much money a company is going to make in the future. Not this year, not the next year but decades is already pretty close (because of the discounting).

No it’s not. It has no theoretical relationship with future earnings at all, and even if it did, that theory would be silly.

Intel's revenue is 54B to AMD 22B. If Intel's CPU division was spun off, I see little reason to believe AMD deserves a 3x premium to that - and you get IFS with Intel as well right now!

Granted, IFS is the millstone hanging around their neck right now, unless they can fix it.

Intel still has 75% of data center market share (for CPUs). I think this is mainly momentum and they will lose most of it in coming years.

To add to that, AMD's has the more lucrative higher-margin part of that market.

Why focus on revenue instead of income? Regardless of what Intel’s revenue is, they’re losing money. AMD is earning.

Losing money for one financial year is not a good enough indicator to draw conclusions.

sotck can be low because it's undervalued by the entire market and going to jump once they catch up to the future value potential, or it can be low because it accurately reflects the decline and limited value. If you only see the "attractive perk" from being so low you're the one using historical performance as the indicator, thinking Intel's only a few quarters or years away from former glory days.

Efficient market hypothesis dictates the price accurately reflects valuations. So if a stock price is down relatively, it's because the wealth of information available on it indicates its decline.

I too, used to be a dyed in the wool boglehead that believed in efficient markets. The missing small cap value / international premium over the past twenty years has me convinced otherwise today.

You raise a valid objection:

    To put the US equity outperformance of the last 15 years in perspective, US equities historically have outperformed non-US equities by 2.3 percentage points annualized since 1926 and by 2.7 percentage points in the post-WWII period. In our strategic asset allocation models for clients, we assume one percentage point of outperformance annualized [0]

Not sure this really breaks the idea of small cap vs large cap (since there's been swings and reversals in that in just the past 15 years IIRC), just the international equity differences.

Also, just going to note that 20 years is really not that long and it's reasonable for valuation swings to take that long to reverse.

[0]: https://privatewealth.goldmansachs.com/outlook/2024-isg-outl...

You would be surprised, but nvidia’s employee stock plans allow to select the purchase price within the last 2 years https://www.nvidia.com/en-us/benefits/money/espp/

ESPP is completely different from stock-based compensation.

> allow to select the purchase price within the last 2 years

I don't think that's true. My reading of that is "you lock in the price on your start date and can keep that for the next 2 years going forward". That doesn't help anybody joining at >$1k / share. :D (and that's only ESPP, not standard stock compensation).

Can't speak for NVIDIA but at another company I know they use the lowest price on the last 4 periods (so lowest of 8 timestamps)

ESPP is a very small amount vs RSUs. You’re limited to buying $25,000 per year (that you still have to shell out for even if it’s at a discount) vs just being given several hundred thousand (or more) in RSUs.

By what metric do you consider INTC to be low? I took a look because I'd be happy picking up some cheap INTC, but it still looks expensive to me.

It's trading significantly below book? $120 B vs $82 B.

Downside is that most of their assets are their fabs...

That can also mean they haven’t done asset writeoffs they should have already done in previous quarters.

If you have billions in obsolete equipment you can technically get away with not doing an asset write off so it doesn’t show in the books of current quarterly performance. Just claim it’s not actually obsolete yet. It catches up eventually though.

So the above may be more of a timebomb than a value signal. It can indicate that Intel hasn’t written off ~$40billion of assets it should have and it would seem a lot of investors are aware of this. They are already losing $10billion a quarter without counting those write off so I understand the hesitance.

Their revenue is >twice AMD's. If IFS disappeared they'd probably have a better valuation than they do right now solely based on processor performance, but their success in the foundry business is probably contributing negative value to their market cap (presumably because it's soaking up so much cash for nil returns)

Intel upside right now is possibly very high, if they can fix the foundry. Their current stock is pricing in complete catastrophe, rightly or wrongly (TSMC is priced at 750B mkt cap, for perspective). Yes, intel isn't as successful as TSMC right now, but only ten years ago intel foundry was better than TSMC.

I don't know where they'll go. But I feel you have much better risk/reward with intel right now.

And it seems like they don't have a whole lot to fix to be back on top or at least extremely competitive. They know how to run foundries, they just need to catch up on the tech side, it's going to take a bit of time and cash but it's not like if they don't have experience doing it previously.

On the chip design side of things, they seemed to have almost caught up (at least to AMD/Qualcomm, Apple is another story) because their upcoming low power laptop chips generation looks like it will be very competitive in terms of power per watts. And they benefit from years of refinement in the software side as well as quite competitive GPU stack, people seem to forget too easily but AMD products still have many annoyances that Intel ones just dont (recently WIFI issues on their latest laptops) and Qualcomm is a no go unless you do browser-based stuff for the most part.

I don't understand people giving up Intel for dead, because even at their worse in the past few years, they were still competitive, both in performance and price; once they figure out the process and design (seems to be on good way) I would worry a lot more about the other side of competition, but who knows...

I mean, I have a lot more confidence that nvidia will continue to deliver products to a market that wants to pay for them over Intel at this point in time, even if the stock is likely to come crashing back down to earth soon. As an employee, I wouldn't really factor in stock performance necessarily, but the overall image and outwardly visible struggles Intel is going through tells me the internal struggles are probably far worse than the public or shareholders know.

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