Intel Stock Sinks 40%, But Most Analysts Still Aren’t Bullish on INTC

Intel (INTC) stock has dropped 40% from its 52-week high, erasing a large portion of its earlier gains. The sharp pullback reflects multiple factors, including profit-taking after a strong rally, valuation concerns, and persistent competitive pressures.

While INTC stock has lost considerable value, its turnaround strategy is beginning to show results, with the company delivering solid growth as reflected in its recent second-quarter financial results. Further, Intel is positioning itself to benefit from the AI-driven surge in demand for advanced computing solutions.

The chipmaker’s broad portfolio spanning traditional CPUs and GPUs, AI-optimized processors, and custom ASICs designed for increasingly complex AI workloads positions it well to capitalize on the rapid expansion of AI infrastructure spending. Still, despite its solid growth prospects and improving fundamentals, most Wall Street analysts aren’t bullish on Intel stock.

Why are analysts staying on the sidelines? Let’s take a closer look.

AI-Driven Demand Is Revitalizing Intel's Growth Story

After several challenging years marked by execution issues, market share losses, and competitive headwinds, Intel is beginning to regain momentum. The recovery is being driven by surging investment in AI infrastructure, Intel’s better execution across its core businesses, and strong customer demand for its products.

Intel delivered a solid Q2, and the strength of its AI business suggests the recovery could continue. The firm reported revenue of $16.1 billion, with AI-related businesses growing more than 70% year-over-year (YOY) and contributing roughly 70% of total revenue, making AI Intel's biggest growth driver.

The Data Center and AI (DCAI) segment led the way. As enterprises and cloud providers continue investing heavily in AI infrastructure, demand for high-performance server processors has surged. DCAI generated $6.3 billion in revenue, up 24% sequentially and 59% YOY. The segment’s growth was led by strong spending from hyperscale cloud providers and enterprise customers. Intel also said its Xeon 6 processor is among the fastest-ramping products in the company's history, reflecting strong customer adoption.

Intel's purpose-built AI silicon is also gaining traction. Revenue from these products rose about 20% sequentially and nearly tripled YOY. The company further strengthened its long-term position by securing additional customer commitments and expanding its AI strategy through a multiyear partnership with SambaNova.

Looking ahead, Intel is likely to see solid demand for CPUs as AI workloads shift beyond model training toward inference, agentic AI, and multi-agent systems. The company expects industry server CPU shipments to grow, with momentum extending into 2028.

Intel’s earnings outlook is also improving. Higher shipment volumes, a better product mix, increased pricing, and continued cost discipline should support margin expansion and profit growth. For Q3, Intel expects revenue of $15.8 billion to $16.8 billion, with the midpoint of $16.3 billion reflecting both sequential and YOY growth. At the same time, adjusted gross margin is projected to reach 42%. Intel projects adjusted EPS of $0.38, well above $0.23 reported a year earlier.

Most Analysts Still Rate INTC Stock as a 'Hold'

Intel's latest quarterly results indicate that its turnaround strategy is beginning to gain momentum. Robust AI infrastructure spending is driving record demand for its data-center products, while customer adoption of Xeon processors continues to accelerate. At the same time, the chipmaker is expanding its long-term AI opportunity through strategic partnerships and benefiting from improving profitability, which strengthens its investment outlook.

However, of the 45 analysts covering Intel, 31 maintain a “Hold” rating on INTC stock, primarily due to valuation concerns. Despite the notable pullback, Intel is still up about 321% over the past year. The significant rally indicates that much of the positives are reflected in the share price.

Further, Intel currently trades at a forward price-to-earnings (P/E) multiple of about 130.6 times, well above Advanced Micro Devices' (AMD) P/E ratio of 78.9 times. This premium valuation keeps most analysts on the sidelines.

The Bottom Line

While Intel is likely to deliver solid growth, supported by strong AI-driven demand and improving execution, INTC stock’s steep run-up over the past year suggests that much of the optimism is already reflected in its valuation.

Long-term investors may consider using the current pullback as an opportunity to accumulate shares. However, those with a shorter-term investment could wait for a deeper pullback to secure a more attractive entry point.