Intel Corp. (NASDAQ:INTC)

The financial performance, as measured by economic profit, exhibits a significant decline over the observed period. Initially positive, economic profit transitions to substantial negative values, indicating a diminishing ability to generate returns exceeding the cost of capital. This analysis details the observed trends in net operating profit after taxes, cost of capital, invested capital, and their combined impact on economic profit.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrates a dramatic decrease from US$19,493 million in 2021 to US$3,672 million in 2022. This decline continues into negative territory, reaching US$-1,469 million in 2023 and further deteriorating to US$-13,095 million in 2024. A slight recovery is noted in 2025, with NOPAT reaching US$577 million, though remaining significantly below the 2021 level.

Cost of Capital

The cost of capital fluctuates over the period. It decreases from 18.67% in 2021 to 17.37% in 2022, then increases to 18.42% in 2023. A decrease is observed in 2024 to 15.93%, followed by an increase to 19.30% in 2025. These fluctuations, while present, do not appear to be the primary driver of the observed decline in economic profit.

Invested Capital

Invested capital shows a consistent increase throughout the period, rising from US$88,498 million in 2021 to US$116,604 million in 2025. This increase in invested capital, coupled with the declining NOPAT, contributes significantly to the worsening economic profit.

Economic Profit

Economic profit begins at US$2,969 million in 2021, indicating value creation. However, it rapidly declines, becoming negative in 2022 at US$-11,728 million. The negative trend accelerates, reaching US$-18,432 million in 2023 and US$-27,794 million in 2024. While the magnitude of the loss decreases slightly in 2025 to US$-21,932 million, it remains substantially negative. The consistent negative economic profit suggests the company is destroying value as returns are not covering the cost of capital.

The combined effect of decreasing NOPAT and increasing invested capital, despite fluctuations in the cost of capital, results in a substantial and sustained decline in economic profit. The recovery in NOPAT in 2025 is insufficient to offset the increased invested capital and higher cost of capital, leaving economic profit significantly negative.

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 deteriorating trend over the observed five-year period. Initially positive, the ratio transitions to significantly negative values, indicating a declining ability to generate returns exceeding the cost of capital. This is corroborated by the movement in economic profit, which declines from a positive value to substantial losses.

Economic Spread Ratio

In 2021, the economic spread ratio stood at 3.36%, suggesting that the company generated returns exceeding its cost of capital. However, a sharp decline is evident in subsequent years. The ratio decreased to -13.23% in 2022, then to -20.01% in 2023, and further to -30.11% in 2024. A slight improvement is observed in 2025, with the ratio reaching -18.81%, though it remains substantially negative. This pattern suggests increasing inefficiencies in capital allocation or a diminishing competitive advantage.

The invested capital demonstrates a generally increasing trend, rising from US$88,498 million in 2021 to US$116,604 million in 2025. This increase in invested capital, coupled with the declining economic spread ratio, suggests that the company is deploying more capital into ventures that are generating returns below the cost of that capital.

Economic Profit

Economic profit mirrors the trend in the economic spread ratio. Starting at US$2,969 million in 2021, it rapidly declines, becoming negative in 2022 at -US$11,728 million. Losses continue to escalate, reaching -US$27,794 million in 2024, before moderating slightly to -US$21,932 million in 2025. The consistent negative economic profit reinforces the conclusion that the company’s investments are not generating sufficient returns to cover the cost of capital.

The divergence between the increasing invested capital and the decreasing economic spread ratio and economic profit is a key observation. It indicates a potential issue with the effectiveness of capital deployment strategies. While the company continues to invest, the returns on those investments are diminishing, leading to substantial value destruction.

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$2,969 million in 2021. However, a significant decline occurred in subsequent years, culminating in a loss of US$27,794 million in 2024. While the loss lessened slightly in 2025 to US$21,932 million, it remained considerably negative. This suggests increasing challenges in generating profits sufficient to cover the cost of capital employed.

Net Revenue

Net revenue decreased steadily from US$79,024 million in 2021 to US$52,853 million in 2025. This consistent reduction in revenue likely contributes to the observed decline in economic profit, although the magnitude of the profit decline exceeds the revenue reduction, indicating potential issues with cost management or capital efficiency.

Economic Profit Margin

The economic profit margin started at a positive 3.76% in 2021. It then experienced a dramatic fall to -18.60% in 2022, continuing to -33.99% in 2023, and reaching a low of -52.34% in 2024. A slight improvement to -41.50% was noted in 2025, but the margin remained substantially negative. The increasing negativity of this metric demonstrates a widening gap between returns generated and the cost of capital. The substantial decline suggests a weakening competitive position or increasing capital costs.

The combined trends indicate a concerning pattern. Declining revenue, coupled with a substantial decrease in economic profit and a worsening economic profit margin, suggest a fundamental shift in the company’s profitability and value creation capabilities. Further investigation into the drivers of revenue decline and cost structure is warranted.