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The good news for Intel (NASDAQ: INTC) investors just keeps getting better.

Earlier today, I pointed out how an upgrade to “buy” from Japanese investment bank Mizuho & Co. sent Intel stock up a few percentage points in morning trading. And now, as we round noon and enter the midday market, Intel just keeps going higher.

As of 1 p.m. ET, shares of the once-upon-a-time leading semiconductor stock (which has fallen on hard times these last couple of years) are up 5.7% and apparently heading toward a 6% gain. The question for investors now is this: Does Intel really deserve to be going up so much?

Warning: Past performance may imply future results

And the answer is: It depends.

What it depends on is whether you plan to value Intel on what Mizuho thinks the company can accomplish over the next year or three, or on what Intel has actually done over the last two years — and the differences couldn’t be starker.

Over the almost two years since 2021, when the pandemic interrupted semiconductor supply chains and delivered enormous pricing power to semiconductor stocks like Intel, through the company’s trailing-12-month results, Intel has suffered a steep 33% decline in revenue, and a total loss of profitability.

In 2021, data from S&P Global Market Intelligence show that Intel earned just under $20 billion in generally accepted accounting principles (GAAP) net profit. In 2022, that profit got cut in half. Over the last 12 months, Intel lost $1.6 billion.

Mizuho, however, argues essentially that this time will be different. Predicting great things for three core semiconductor products for data centers that Intel aims to introduce next year, Mizuho thinks both sales and profits will rebound next year (to $63.8 billion and $2.01 per share in non-GAAP earnings, respectively), and then grow even more in 2025.

Should you buy Intel?

Investors betting on Intel today are betting that Mizuho is right about Intel’s turnaround. But here’s what they may not have noticed: Deep within the numbers of Mizuho’s forecast is further bad news for Intel stock.

The $2.01 per share in 2024 “profit” that Mizuho is projecting are non-GAAP. The banker actually doesn’t make any prediction that Intel will earn any profit in the way GAAP define the term. What’s more, in terms of free cash flow, Mizuho forecasts the Intel will burn through $6.3 billion in cash in 2024 — and burn $5.2 billion more in 2025 as well!

Call me a skeptic, but I just can’t see my way to paying $170 billion or more for a company that’s burning $6 billion and $5 billion in cash a year, just because Mizuho thinks the picture might improve as time goes along. Intel stock, to me, remains a sell.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel and long January 2025 $45 calls on Intel. The Motley Fool has a disclosure policy.

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