Intel (INTC) stock is up about 123% year to date, at the time of writing, Friday morning, April 24, according to Yahoo Finance. Meanwhile, the SPDR S&P 500 index (SPY) is up about 4% in the same period.
Following the Q1 earnings report on April 23, the stock is soaring 22% and trading near $82, which means it has surpassed its dot-com bubble record price.
The report is stronger than the company guidance, which isn’t that unusual after disappointing Q4 earnings reported in January.
Intel’s guidance for Q1 was weak:
- Revenue in the range of $11.7 billion to $12.7 billion
- Gross margin 32.3%
- Diluted loss per share attributable to Intel $0.21
But that weak guidance was not surprising.
The report adds to the recent trend of good news for the stock.
Key good news for Intel:
- Intel repurchased Apollo’s (APO) equity interest in the joint venture related to Intel’s Fab 34 in Ireland.
- The company confirmed it will join Elon Musk’s Terafab AI chip complex project.
- It has a multiyear partnership with Google to build out AI and cloud infrastructure.
Key facts from Intel’s earnings report
Intel CEO Lip-Bu Tan confirmed during the earnings call that the demand for CPUs is growing, thanks to the AI infrastructure build-out.
“Even as we improve factory output, demand continued to run ahead of supply for all our businesses, especially for Xeon server CPUs, where we expect sustained momentum this year and next,” Tan said. “Intel 3-based Xeon 6, and Intel 18A-based Core Series 3 products are now in full volume production ramp, and each represents the fastest new product ramp in five years.”
He also noted that yields for the 18A manufacturing process (node) are improving, which is a critical issue.
“We have made steady progress with Intel 4 and Intel 3, and 18A yields are now running ahead of the internal projections, representing a meaningful inflection in our execution and our factory finished goods output.”
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Tan added that more advanced Intel 14A node maturity, yield, and performance are outpacing Intel 18A at a similar point in time. While what Tan said sounds reassuring, we still haven’t been given the exact yield percentage.
Intel beat its revenue guidance of $13.6 billion, up 7% year over year, and its gross margin, too, at 39.4%.
The company provided guidance for Q2 2026:
- Revenue in the range of $13.8 billion to 14.8 billion
- Gross margin of 37.5%
- Diluted earnings per share attributable to Intel $0.08
Bank of America raises Intel stock price target
Following the report’s release, Bank of America analyst Vivek Arya and his team updated their view on Intel stock.
The team said that reported gross margins remain subpar, while the company continues to burn cash, as it invests in additional capacity and faces headwinds from still-low 18A product yields.
This has prompted the team to switch from enterprise value to sales ratio to a sum-of-parts (SOP) valuation for Intel.
Analysts noted three key issues:
- The team believes that key Intel’s recovery is well-priced in.
- The company’s projected 10-15% sales compound annual growth rate outlook for 2025-2028 remains well below the 30-40% of peers.
- Intel Foundry still needs to prove itself to external customers.
The team raised its 2026/2027/2027 proforma-EPS estimates by 66%/39%/50% to $1.04/$1.58/$2.25, respectively.
In a research note shared with me, Arya reiterated an underperform (sell) rating for Intel stock and raised the price target to $56 from $48, based on a conceptual sum-of-parts valuation that values internal IDM at $45 and external foundry at $11, in line with competitive peers.
Analysts noted downside risks for Intel stock:
- Lower than yield/ramp at Intel Foundry, particularly for its new 18A and upcoming 14A nodes
- Lack of material external foundry customer in wafer processing
- Weaker-than-expected trends in a mature PC market
- Accelerated share loss to major CPU competitors
Upside risks:
- Key external foundry packaging/wafer deals that could significantly boost sales/utilization
- Greater-than-expected yields/ramps at 18A and upcoming 14A nodes
- Stronger-than-expected PC market from Windows 10 refresh or AI uplift
- Geopolitical tensions boosting sentiment for domestic manufacturing assets
Related: Bank of America resets Google stock forecast ahead of earnings
