Intel Stock: Should You Invest in it Right Now?

Overview

• Intel posted its first year-over-year revenue growth in five quarters, beating expectations with $12.9 billion in Q2 sales.

• Margins remain under pressure, with the company reporting an adjusted operating loss and ongoing cash burn.

• While a long-term turnaround may be possible by 2026, short-term growth prospects lag behind NVIDIA and AMD.

Intel Corporation (INTC), currently trading at $20.52 with an increase of 2.91%, released its second-quarter earnings last week, marking its first year-over-year revenue growth in more than a year but still struggling to impress on profitability. While the numbers brought a welcome surprise on the top line, persistent margin weakness, ongoing cash burn, and a stretched valuation keep the stock in cautious territory.

The report underscores Intel’s challenge in keeping pace with NVIDIA and AMD, both of which have been faster to capture opportunities in the artificial intelligence (AI) boom.

Revenue Beats, But Margins Disappoint

Intel posted Q2 revenue of $12.9 billion, a modest 0.2% increase from a year ago, but well above expectations for a sharp drop. Gains in the Data Center segment (+4%), Foundry services (+3%), and 'Other' revenues (+20%) offset a 3% decline in the Client Computing Group. 

Intel Share Price saw an uptick following positive market sentiment. This was Intel’s most considerable dollar revenue beat in 3.5 years and its first year-over-year growth in five quarters. Analysts predict mixed results for Intel Stock ahead of the quarterly earnings release.

However, profit metrics were less encouraging. About $1 billion in one-time and non-cash charges related to excess tools and accelerated depreciation cut roughly eight percentage points from both GAAP and non-GAAP gross margins. 

Even without these charges, margins were lower than last year. Intel swung to an adjusted operating loss, with a non-GAAP loss of $0.10 per share, missing break-even estimates.

Revenue Steady, But Profit Falls Short

For Q3, Intel projected revenue of $12.6 billion, roughly in line with expectations. While stable sales are encouraging, gross margin pressure persists as new products ramp up, and cost savings have yet to take effect fully. 

Analysts were expecting a small profit, so this disappointing earnings outlook was another blow. In combination with the Q2 miss, this has resulted in even further cuts to non-GAAP EPS estimates for 2025 and beyond.

Cost Cuts and Balance Sheet Challenges

Intel has moved aggressively to cut costs, trimming its workforce by about 15% in 2025 and targeting $1 billion in annual operating expense savings by next year. Capital expenditures are being reduced as well.

Strong Intel Q2 Earnings numbers could boost investor confidence significantly. Still, adjusted cash burn exceeded $1 billion in Q2. The company holds $21 billion in cash and short-term investments, plus $5 billion in long-term equity holdings, but total debt exceeds $50 billion. 

The upcoming sale of part of its Altera stake will help reduce leverage, but restoring sustained free cash flow is critical for long-term growth.

Also Read: Trump Demands Intel CEO’s Resignation, Criticizes for Indirect Chinese Military Funding

Valuation Remains Stretched

With minimal adjusted profit expected in 2024, Intel trades at over 150 times this year’s projected earnings, well above most peers. Using 2026 estimates, the forward P/E falls to about 30, slightly cheaper than NVIDIA’s 31 but above AMD’s 29.

The issue is that Intel’s revenue growth is projected to lag significantly behind rivals, and its higher percentage earnings growth forecast for 2026 is mainly due to its very low starting base.

Should You Buy Intel Stock?

At present, Intel is not an attractive buy for most investors. While revenue growth is a positive shift, it lags far behind NVIDIA and AMD, and profitability remains under significant strain. Margins are weak, cash flow is negative, and valuation is complex to justify given the growth outlook.

Long-term investors who have confidence in Intel's turnaround narrative, particularly as it relates to its foundry expansion and potential AI contributions, might see value if this strategy begins to gain traction by 2026. 

However, for investors interested in immediate growth, competitors currently provide better opportunities. Patience is still a virtue, as Intel is still in the process of rebuilding over multiple years.

Also Read: NVIDIA, AMD Agree to Share 15% of China Chip Revenue with US

Analyst Sentiment

Wall Street’s view remains cautious, with a consensus rating of 'Hold.' The average price target of $21.95 implies roughly 10% upside from current levels. This is a steep drop from the high $30s a year ago and the mid-$60s four years ago, reflecting a long-term decline in analyst confidence.

Conclusion

Intel’s Q2 results were mixed: better-than-expected revenue but weak earnings and ongoing margin pressure. Until the company can consistently grow profits, generate positive free cash flow, and improve competitiveness, the stock will likely remain a hold. 

For now, NVIDIA and AMD offer stronger growth, making Intel more of a 2026 turnaround story than a near-term winner.

FAQs:

1. Did Intel’s Q2 earnings beat expectations?

Yes, revenue exceeded forecasts, but profitability fell short due to margin pressure and one-time charges.

2. Why is Intel’s stock valuation considered high?

With minimal profits expected in 2024, the P/E ratio is above 150, far higher than most peers.

3. What is Intel doing to improve performance?

It’s cutting costs, reducing its workforce by 15%, and expanding its foundry and AI chip initiatives.

4. Is Intel a good buy for short-term investors?

No, current growth and profit metrics make it more suitable for long-term, patient investors.

5. When might Intel’s turnaround materialize?

Analysts suggest 2026 could be the earliest for meaningful profit and competitive improvement.