Key Points
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Technical breakthroughs and a revived CPU market have improved Intel’s prospects.
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It will likely take more time for such improvements to meaningfully appear in Intel’s financial metrics.
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After years of decline, Intel (NASDAQ: INTC) has seemingly revived its fortunes under the leadership of CEO Lip-Bu Tan. The successful adoption of the 18A process, rising demand for CPUs, and increased customer commitments in its foundry business helped the stock rise by 278% in the first half of 2026.
Unfortunately, the stock’s fortunes began to reverse course in July, leading to daily drops of as much as 10%. Amid that downtrend, one might wonder whether to buy the dip or run for the hills. Interestingly, the answer may be simply to hold off on any decisions on the chip stock, and here’s why.
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The state of Intel stock
Without a doubt, Tan has transformed Intel from a former industry leader in decline to a vibrant competitor.
Its success with the 18A process node means that it could potentially challenge Taiwan Semiconductor Manufacturing (TSMC) in the production of the world’s most advanced chips. Also, as CPUs become more critical to data centers, Intel has an incentive to try to take its technical lead back from AMD, whose CPUs surpassed Intel’s in terms of performance.
Reports surfaced that Intel’s foundry business has begun to win business. Tesla and Apple have signed production agreements with Intel, and other industry giants considered shifting production to Intel as well. This is a massive win for the U.S. as Intel works to shift more production away from the geopolitically contentious Taiwan region.
Nonetheless, Intel’s financial metrics indicate that investors got ahead of themselves in bidding up the stock price. In the first quarter of 2026, Intel’s revenue of $13.6 billion rose by 7% compared to year-ago levels. Although that improved over the flat revenue performance during 2025, it is far below other tech giants, which reported revenue growth in the double-digit percentage range.
Additionally, it was a $4.1 billion restructuring charge in Q1 that contributed heavily to its $3.7 billion net loss. Still, when considering the $26 million in net income for 2025 and the $1.5 billion in non-GAAP net income for Q1, investors can at least know that Intel has become profitable again from an operational standpoint.
Furthermore, the aforementioned $26 million profit is too small to offer a meaningful P/E ratio. When looking at the forward P/E ratio, it comes in at 127, and the forward one-year earnings multiple is at 89. Thus, even with Intel on a likely recovery path, the stock price is likely years ahead of the company’s anticipated growth.
Intel stock is a likely hold
Intel’s stock probably fell in recent days due to the stock price moving ahead of fundamentals. Hence, when also considering its forecasted growth, the stock is likely a hold.
Thanks to Intel’s technical breakthroughs and recent contract wins, the company again emerged as a competitor in the chip industry. Assuming it stays on that path, it may eventually justify the stock’s massive AI rally.
Unfortunately, the high forward multiples imply that the selling trend could continue over the near term. Until that decline stops (or the valuation becomes more reasonable), investors should probably refrain from buying more Intel shares.
Should you buy stock in Intel right now?
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Will Healy has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Intel, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
