Key Takeaways
- Intel fell 8% today as chip stocks sold off on worries that Democrats’ midterm wins could slow the data-center buildout.
- Intel’s problem is supply: it can’t make enough server chips, so a slower buildout hurts it less than most.
- Microchip Technology fell harder than Intel, a sign the selling hit chipmakers across the board.
- With estimates already cut and the forward P/E below its five-year average, much of the bad news looks priced in.
Intel (INTC) fell 8% today as chip stocks sold off for a second straight day, on worries that Democrats’ bigger-than-expected midterm wins will slow the data-center buildout.
That’s less than the semiconductor index’s 11% drop. And Microchip Technology (MCHP), which also makes chips in its own fabs, fell 13% with no news of its own.
What exactly happened
Democrats won both chambers of Congress in Tuesday’s midterms, and on Wednesday, Democratic Rep. Yassamin Ansari called for a pause on advanced AI development until regulations are in place.
Intel came in bruised: the stock is down nearly half in a month after guiding fourth-quarter revenue to $15 billion to $16 billion on Oct. 29.
Intel’s problem is supply
What held that guide back was supply. A two-week shutdown at its Kiryat Gat fab in Israel cost it roughly $300 million of revenue, and a substrate shortage is limiting how many Xeon server chips it can ship. CEO Lip-Bu Tan called unlocking Xeon supply Intel’s “immediate priority.”
So a slower buildout hurts Intel less, since it already has more server demand than it can fill. If Congress slows data-center spending, though, that demand could cool before supply catches up.
The selling also hit chipmakers without Intel’s troubles. Microchip’s June-quarter net sales rose 38% to $1.49 billion, and it guided the September quarter up 7% to 9% from there. If its next report shows that recovery holding, today’s drop had little to do with its business.
TIKR tracks 49 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
Much of the bad news is in the price
Analysts already cut their 2027 normalized EPS estimate from $2.11 to $1.81 after the guide. They still expect Intel’s earnings to climb to $2.98 a share by 2028:
And Intel traded at 43x forward earnings on Monday, below its five-year average of 50x:
At today’s price, it’s around 40x. That’s still far above the 10x to 18x it traded at from 2014 to 2022, so the stock is priced for a turnaround.
Bottom line: most of the bad news looks priced in, and a Democratic Congress worries me less than Intel’s supply problems. Of course, that holds only if Xeon shipments pick up by the fourth-quarter report early next year.
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!
