Key Takeaways
- Intel shares fell 27% in the past week on a fourth-quarter revenue guide well short of the $17.1 billion expected.
- Data center revenue rose 78%, but substrate shortages and a two-week shutdown at its Israel fab are limiting shipments.
- AMD can win server sales Intel can’t fill, and the memory shortage lifting Micron is hurting PC demand.
- Even after the drop, the stock isn’t cheap, with negative free cash flow expected in 2027.
Intel (INTC) stock is down 27% in the past week after a fourth-quarter outlook far below Wall Street’s.
Friday’s 29% drop alone was bigger than the week’s loss, after gains earlier in the week.
Rival Advanced Micro Devices (AMD) fell with it, and Intel blamed its PC slump on the memory shortage that’s driven record sales at Micron Technology (MU).
A Strong Quarter, Then a Weak Guide
Third-quarter revenue rose 21% to $16.5 billion, with data center revenue up 78% to $7.3 billion.
Then came the outlook:
- Revenue of $15.0 billion to $16.0 billion, against $17.1 billion expected
- Adjusted gross margin of 38%, down from 44.1%
- Adjusted EPS of $0.25, against a $0.43 estimate
Going in, analysts expected EPS to climb from $0.42 in 2025 to $2.10 in 2027:
Plenty of Demand, Not Enough Chips
“Our immediate priority is to unlock additional supply to meet extraordinary demand for our Xeon family,” CEO Lip-Bu Tan said in Intel’s third-quarter release.
But a shortage of packaging substrates is limiting shipments, and an Oct. 14 explosion that killed two workers at Intel’s Israel fab halted production there for about two weeks.
CFO David Zinsner also sees “the PC slowdown continuing at least through the first half of next year.”
Xeon customers can turn to AMD, and JPMorgan figures Intel’s slice of server CPU revenue already went from 77% in late 2022 to 53%. But AMD sells PC chips too, so its report on Tuesday will show whether the PC hit is Intel’s alone.
Micron is on the other side of the slump: scarce memory lifted its revenue to a record $54.2 billion in its fiscal fourth quarter, ended Sept. 3.
TIKR Tracks 48 Analysts on Intel. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Intel, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Intel’s Analyst Ratings
Intel Still Isn’t Cheap
At Thursday’s close, Intel traded at 53x forward earnings, near its five-year average of 50x:
After Friday’s drop, it’s closer to 38x, still more than triple its mid-2022 low of 10.6x.
And management called 2027 an “investment year,” with analysts not expecting positive free cash flow until 2028:
The way I see it, the server demand is real, but I’d want to see the chips ship before paying that multiple.
I’d take another look if the late-January report shows the Israel fab back, more substrates and gross margin of 38% or better.
So What Is Intel Stock Actually Worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
