Tech Newsround – Intel Q1 & Meta

Intel Q1 26 – Meme stock territory

• The upswing in demand for CPUs that has caused the valuation of the shares to rocket is a perfect opportunity for Intel to raise a large amount of money and fix the obsolescence that still threatens to engulf it.
• Intel reported excellent results relative to expectations, as the shift towards inference and longer “thinking” times means that more CPUs are needed to manage the GPUs.
• Q1 26 revenue / Adj-EPS came in at $13.6bn / $0.29, nicely ahead of consensus at $12.4bn / $0.02, and the company guided strongly as a result of data centre demand.
• Q2 26 revenues / Adj-EPS will be $13.8bn – $14.8bn ($14.3bn) / $0.20 ahead of consensus of $13.7bn / $0.11.
• The shares jumped 28% in after-hours trading, taking Intel firmly into meme-stock territory.
• I say meme-stock because there is no other way to describe it when the shares are on a 2026 PER of 137x, and its technology looks obsolete
• Even on 2027 EPS, which already assumes some recovery, the shares are trading on 78.0x PER.
• However, the share price offers Intel a golden opportunity to raise a lot of money and fix its internal problems, which in my opinion, remain legion.
• The only reason why it is doing well at the moment is that the legacy data centre designs still use x86 processors, but the writing is on the wall that the whole lot will migrate to Arm over time.
• This means that the core IP upon which Intel designs its products is becoming obsolete and the company needs to invest and find a away out of this problem.
• The market is giving Intel an opportunity to raise the money to make that investment, but I suspect that Intel is being lulled into a false sense of security by the sudden jump in demand for its products.
• I continue to avoid this company as I remain concerned with regard to the long-term outlook.

Meta – Zuck the Knife

• Meta is cutting staff to pay for its AI investments, but the reality is that this company has had a bloated employee base for years, and using AI as an excuse is a good way to avoid a lot of negative press.
• Meta will cut around 8,000 jobs and also not hire for 6,000 positions that it has open or planned to open, giving an effective reduction of 14,000.
• The problem that Meta has is that it sells neither the intelligence nor the compute that it generates directly to the market.
• Google, Microsoft, Amazon, OpenAI, Anthropic, etc., all sell both the intelligence that they produce and compute horsepower, giving them an easier way to earn a return on the hundreds of billions they are investing this year alone.
• This means that it is the existing apps and services that must earn the return, which increases both the risk and the opacity of the company.
• The idea is that Meta will create “personal superintelligence” that will drive usage of existing apps and Meta’s dominance of the emerging “AI glasses” space.
• The other problem is that, so far, Meta’s AI has been a big disappointment and all of the ground that it gained in open source has been ceded to China and it is also struggling to create a leading model upon which to base its offering.
• Its latest model Muse Spark has not had much of an impact, and Meta will admit that it is still adrift of where the frontier labs currently are.
• Meta needs to invest heavily both in compute and in the brains to build the models, and cutting staff that are no longer needed is a good way to pay for at least part of it.
• This is good news for shareholders, but at 22.1x 2026 PER, the shares are more expensive than Nvidia, with a lower growth trajectory and unproven AI position.
• The risk-reward makes no sense at all, and so I continue to have no interest in this company.