Quick Read
-
Intel's data center revenue jumped 78% to $7 billion, yet the stock still plunged 50% in a month on weak guidance and cash burn.
-
NVIDIA invested $5 billion in Intel and chose its CPU for the DGX Rubin NVL8, while Oracle signed a multiyear Xeon deal.
-
CFO David Zinsner said, "I don't think this will be a year in which we see positive cash flow," as foundry losses persist.
-
Read More: Learn 7 ways to generate income with a $1,000,000+ portfolio (sponsor)
Intel( NASDAQ:INTC ) trades at $56.28. The shares trade modestly above where they traded eight years ago, but the business underlying has been rebuilt around data center demand. Over the past month the stock fell 50.25%, and that drop came right after Intel posted its strongest data center growth in 15 years.
Intel designs and manufactures semiconductors through two arms, Intel Products and Intel Foundry. In 2018 its fortunes rested on x86 chips for PCs and servers. Since then, Advanced Micro Devices( NASDAQ:AMD ) has taken market share, and Arm-based processors and AI accelerators have challenged the traditional CPU market . On an adjusted basis, the stock has gained just 33.47% over eight years.
The latest drop followed third-quarter results that combined record server growth with a soft fourth-quarter outlook, heavy spending plans and a deepening PC slump .
Server CPU Demand Is Outrunning Intel's Supply
Data Center and AI revenue rose 78% to $7.32 billion. Segment operating income climbed to $3.04 billion from $964 million. Total revenue rose 20.9% to $16.51 billion, and non-GAAP EPS of $0.52 beat the $0.40 estimate. Management says demand "continues to meaningfully exceed available supply" and expects the industry to stay supply-constrained through 2027 and into 2028.
Learn 7 Ways To Generate Income With A $1,000,000+ Portfolio
If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.
Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)
Intel thinks the server CPU market could grow from $40 billion to more than $200 billion over five years as agentic workloads favor energy-efficient CPUs. NVIDIA( NASDAQ:NVDA ) completed a $5 billion equity investment and picked Intel as the host CPU for its DGX Rubin NVL8. Oracle( NYSE:ORCL ) also signed a multiyear Xeon collaboration. The AI expansion story extends well beyond the chip designers themselves (we covered seven suppliers powering, cooling and networking these data centers in a free report). Analysts expect 2027 EPS of $1.7987, compared with $1.4866 this year. Over the past 30 days that estimate drew seven upward revisions and zero downward.
Foundry Losses and a Cash-Hungry 2027 Threaten the Rebound
Intel Foundry lost $1.85 billion in the quarter. External foundry revenue was just $411 million, and a nonrecurring program provided much of it. CFO David Zinsner was blunt about the year ahead: "I don't think this will be a year in which we see positive cash flow."
Short-term figures are moving lower. Fourth-quarter guidance calls for revenue of $15.0 billion to $16.0 billion, non-GAAP EPS of $0.25 and gross margin of 38.0%. An incident at Intel's Israel factory alone costs roughly $300 million in revenue. Management sees PC units falling about 10% in 2027. A $23 billion equity offering raised the expected diluted share count to 5.44 billion, and the stock still trades at a forward P/E of 33.
Foundry Customer Wins Will Decide the Next Move
The case for caution rests on milestones that are still ahead. Intel expects "a couple of customers ready to announce in the next two quarters" and plans to deliver the Intel 14A 1.0 PDK early next year. Diamond Rapids ramps in 2027. Nova Lake design wins are expected to reach twice those of Panther Lake at launch. Until those arrive and the PC inventory correction ends, the earnings path stays cloudy.
Analysts See Big Upside After the Stock Was Cut in Half
Intel trades at $56.28. The consensus target is $91.12, which implies 61.9% upside. Price targets come with no guarantee, so treat them as one data point among many. The 49 covering analysts break down this way:
-
Strong Buy: 1
-
Buy: 11
-
Hold: 36
-
Sell: 1
Shares are up 52.52% year to date, compared with 7.83% for the S&P 500. Over the past month, though, Intel fell 50.25% while the index slid 5.39%. Over five years, Intel gained 19.22% against 56.94% for the S&P 500. A beta of 2.426 means investors should expect the swings to continue.
Intel's Reset Price Puts the Turnaround Case in Focus
At $56.28, Intel carries a drop valuation.
The selloff priced in a weak fourth quarter and a cash-burning 2027, and management disclosed both openly. It gives too little credit to a data center franchise that is guided to grow mid-teens sequentially even as client revenue falls more than 20%.
Over the next two to three quarters, the path higher runs through foundry customer announcements, the 14A PDK and new Intel 3 capacity. External wins would validate the spending that bears call a waste.
The investment case falls apart if no named 14A customer appears by mid-2027, if Intel 3 yields stall, or if DCAI growth slows as supply increases. Keep an eye on foundry losses, which narrowed by $236 million sequentially last quarter.
At $56.28, Intel trades at a price the market just cut in half while analysts keep raising earnings estimates.
Learn 7 Ways To Generate Income With A $1,000,000+ Portfolio
If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.
Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)
Contact editorial@247wallst.com for any questions or corrections.
