Intel Corp. (NASDAQ:INTC)

The financial performance, as measured by economic profit, exhibits a significant decline over the five-year period. Initial profitability gives way to substantial losses, followed by a limited recovery in the final year. This analysis details the observed trends in net operating profit after taxes, cost of capital, invested capital, and the resulting economic profit.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrates a dramatic decrease from US$19,493 million in 2021 to US$3,672 million in 2022. This decline continues into negative territory, reaching a loss of US$13,095 million in 2024. A modest recovery is observed in 2025, with NOPAT reaching US$577 million, though still significantly below the 2021 level. The volatility in NOPAT is a primary driver of the fluctuations in economic profit.

Cost of Capital

The cost of capital fluctuates over the period, beginning at 18.68% in 2021. It decreases to 17.38% in 2022, then increases to 18.43% in 2023, before falling to 15.93% in 2024. The cost of capital rises again in 2025 to 19.31%. While there is variation, the cost of capital remains relatively stable, not exhibiting the same magnitude of change as NOPAT.

Invested Capital

Invested capital shows a consistent upward trend, increasing from US$88,498 million in 2021 to US$116,604 million in 2025. The increases are gradual through 2023, then accelerate in the final two years. This growth in invested capital, coupled with declining NOPAT, contributes to the worsening economic profit.

Economic Profit

Economic profit begins at US$2,961 million in 2021, indicating value creation. However, it quickly transitions to a substantial loss of US$11,736 million in 2022. Losses continue to deepen, reaching a maximum of US$27,801 million in 2024. While the loss is reduced in 2025 to US$21,944 million, it remains significant. The negative economic profit suggests that the company is not generating returns exceeding its cost of capital, particularly in the years 2022 through 2024.

The observed pattern suggests a weakening ability to generate profits from invested capital. The increasing invested capital base, combined with the substantial decline in NOPAT, has resulted in significant economic losses. The slight improvement in economic profit in 2025 is attributable to a modest increase in NOPAT, but further monitoring is needed to determine if this represents a sustained trend.

The financial performance, as indicated by Net Income and Net Operating Profit After Taxes (NOPAT), demonstrates significant volatility over the five-year period. A marked decline in profitability is evident, particularly in the latter years of the observed timeframe.

Net Operating Profit After Taxes (NOPAT)

NOPAT began at US$19,493 million in 2021. A substantial decrease was observed in 2022, falling to US$3,672 million. This downward trend continued into 2023, with NOPAT becoming negative at -US$1,469 million. The decline accelerated in 2024, reaching a low of -US$13,095 million. A modest recovery is indicated in 2025, with NOPAT reported at US$577 million, though still significantly below the 2021 level.

The trajectory of NOPAT closely mirrors the trend in Net Income attributable to Intel, although the magnitudes of the changes differ. Both metrics show a strong negative correlation, suggesting that changes in operational profitability are a primary driver of overall net income fluctuations. The substantial losses in 2024 represent a significant shift in financial performance, followed by a limited positive adjustment in 2025.

Relationship between Net Income and NOPAT

While both metrics initially show positive values, they both experience a significant downturn. The negative NOPAT values in 2023, 2024, and to a lesser extent 2025, indicate that the company’s operating profits are insufficient to cover its after-tax cost of capital during those periods. The return to positive NOPAT in 2025, albeit small, suggests a potential stabilization or early stage of recovery.

The considerable fluctuations in NOPAT warrant further investigation to determine the underlying causes, such as changes in revenue, operating expenses, tax rates, or capital structure. The shift from substantial profitability in 2021 to significant losses in 2024 represents a critical period requiring detailed analysis.

The provision for taxes exhibits significant volatility over the observed period. Initially positive in 2021, it transitioned to negative values in both 2022 and 2023 before becoming substantially positive in 2024 and moderating in 2025. Conversely, cash operating taxes demonstrate a more consistent, though fluctuating, pattern. A notable increase is observed from 2021 to 2022, followed by a substantial decrease in 2023, and a subsequent rise in 2024, before declining again in 2025.

Provision for Taxes Trend

In 2021, a provision for taxes of US$1,835 million was recorded. This shifted dramatically to a benefit of US$249 million in 2022, and further to a benefit of US$913 million in 2023. A significant reversal occurred in 2024, with a provision of US$8,023 million, followed by a decrease to US$1,531 million in 2025. This pattern suggests considerable fluctuations in taxable income or the utilization of tax loss carryforwards or credits.

Cash Operating Taxes Trend

Cash operating taxes increased from US$2,675 million in 2021 to US$4,893 million in 2022. A substantial decline was then recorded in 2023, falling to US$1,005 million. These taxes increased again in 2024 to US$1,916 million, before decreasing to US$1,223 million in 2025. The changes in cash taxes do not directly correlate with the provision for taxes, indicating potential timing differences between book and tax accounting.

Relationship between Provision and Cash Taxes

The divergence between the provision for taxes and cash operating taxes is particularly pronounced in 2022 and 2023. The benefit recorded in the provision for taxes during these years, coupled with relatively high cash taxes in 2022, suggests deferred tax assets may have been impacted. The large provision in 2024, alongside lower cash taxes, could indicate the reversal of these deferred tax assets or a change in taxable income.

The observed patterns suggest a complex tax position, potentially influenced by factors such as changes in tax laws, jurisdictional mix of income, and the utilization of tax planning strategies. Further investigation into the underlying drivers of these fluctuations would be necessary to fully understand the implications for economic value added.

The reported invested capital demonstrates a generally increasing trend over the five-year period, although with some fluctuation. Total reported debt & leases and total stockholders’ equity contribute to this figure, and their individual movements influence the overall invested capital value.

Invested Capital Trend

Invested capital remained relatively stable between 2021 and 2022, at approximately US$88.5 billion. A moderate increase was observed in 2023, reaching US$92.1 billion, and continued into 2024, reaching US$92.3 billion. A significant increase is then apparent in 2025, with invested capital rising to US$116.6 billion. This substantial growth in the final year suggests a considerable expansion in the company’s capital base.

Debt & Leases

Total reported debt & leases exhibited an upward trend from 2021 to 2023, increasing from US$38.6 billion to US$49.7 billion. The rate of increase slowed in 2024, with a marginal rise to US$50.5 billion, followed by a decrease in 2025 to US$47.0 billion. This suggests a period of increased borrowing followed by stabilization and then a reduction in debt obligations.

Stockholders’ Equity

Total stockholders’ equity generally increased throughout the period. It rose from US$95.4 billion in 2021 to US$105.6 billion in 2023. A slight decrease was noted in 2024, falling to US$99.3 billion, before a substantial increase to US$114.3 billion in 2025. This indicates growing shareholder investment and retained earnings, with a temporary dip before a significant rebound.

The combined effect of these movements in debt and equity is reflected in the overall trend of invested capital. The substantial increase in invested capital in 2025 is likely driven by the significant growth in stockholders’ equity, partially offset by a decrease in debt. The relatively stable invested capital figures from 2021-2024 suggest a period of consistent, but not expansive, capital allocation.

The economic spread ratio exhibits a consistently declining trend over the observed five-year period. Initially positive, the ratio transitions to negative values and demonstrates increasing negativity before a slight moderation in the final year. This suggests a worsening trend in the company’s ability to generate returns exceeding its cost of capital, followed by a potential stabilization, though still at a negative level.

Economic Spread Ratio

In 2021, the economic spread ratio stood at 3.35%, indicating that the company generated returns exceeding its cost of capital. However, this positive spread diminished significantly in 2022, becoming negative at -13.24%.

The negative trend accelerated in subsequent years, with the ratio reaching -20.02% in 2023 and further declining to -30.12% in 2024. This indicates a substantial erosion in the company’s ability to create value for investors.

A slight improvement is observed in 2025, with the ratio increasing to -18.82%. While still negative, this suggests a potential slowing of the value destruction, but not a return to value creation.

The economic profit mirrors the trend in the economic spread ratio, moving from a positive value of US$2,961 million in 2021 to increasingly negative values, reaching a low of US$ -27,801 million in 2024, before moderating to US$ -21,944 million in 2025. This confirms the declining profitability relative to the capital employed.

Invested Capital

Invested capital shows a generally increasing trend throughout the period, rising from US$88,498 million in 2021 to US$116,604 million in 2025. This increase in capital employed occurs concurrently with the declining economic spread ratio and negative economic profit, suggesting that the company is investing more capital while generating lower returns.

The rate of increase in invested capital appears to accelerate in the later years, potentially exacerbating the negative impact on the economic spread ratio.

The combined trends suggest that while the company continues to invest capital, its ability to generate returns on that capital is deteriorating. The slight improvement in the economic spread ratio and economic profit in 2025 warrants further investigation to determine if this represents a genuine turning point or a temporary fluctuation.

The economic profit margin exhibits a consistently deteriorating trend over the five-year period. Initially positive, it transitioned to substantial negative values, indicating a declining ability to generate returns exceeding the cost of capital. This analysis details the observed patterns in economic profit and its relationship to net revenue.

Economic Profit

Economic profit began at US$2,961 million in 2021. However, a significant decline occurred in subsequent years, culminating in a loss of US$27,801 million in 2024, before a slight improvement to a loss of US$21,944 million in 2025. This demonstrates a consistent erosion of value creation.

Net Revenue

Net revenue decreased steadily from US$79,024 million in 2021 to US$52,853 million in 2025. While revenue decline alone does not explain the economic profit margin’s trajectory, it contributes to the overall negative performance. The rate of revenue decline appears to moderate in the later years of the period.

Economic Profit Margin

The economic profit margin started at a positive 3.75% in 2021. It then moved sharply negative, reaching -18.61% in 2022. This negative trend accelerated, with the margin reaching -52.36% in 2024, representing the lowest point in the observed period. A partial recovery was noted in 2025, with the margin improving to -41.52%, though remaining substantially negative. The magnitude of the negative margin suggests that the cost of capital significantly outweighs the economic profits generated from revenue.

The combined effect of declining revenue and increasingly negative economic profit resulted in a substantial deterioration of the economic profit margin. While revenue decline is present, the primary driver of the margin’s performance appears to be the substantial decrease in economic profit, indicating increasing costs relative to returns.