The euphoria that has propelled Intel shares more than 200% higher this year is showing signs of fraying. After a volatile midweek session that saw the stock swing from a 10% plunge on Tuesday to a recovery of nearly 4% on Wednesday, the chipmaker now faces a crosscurrent of downgrades, macro jitters, and a sudden chill in the PC market.
The most direct challenge came from HSBC, which lowered its rating on Intel from “Hold” to “Reduce.” The bank’s analysts argued that the stock has run too far, too fast, pricing in a wave of optimism that the company’s underlying business has yet to deliver. The Relative Strength Index had climbed to 86.11, deep in overbought territory, and Intel’s shares were changing hands at more than 100 times expected earnings – a multiple that HSBC called unsustainable given the ongoing losses in the company’s foundry division.
That downdraft was compounded by fresh data from KeyBanc Capital Markets showing a sharp pullback in notebook shipments. According to the analysis, global notebook deliveries fell 27% in April compared to the prior month. Analyst John Vinh highlighted the negative implications for PC-exposed chipmakers, and Intel – which remains heavily tied to the personal computer cycle – was among the hardest hit. Qualcomm and Advanced Micro Devices also suffered, as investors used the news to lock in profits.
The stock’s ability to regain ground on Wednesday, closing at 106.58 euros in Frankfurt, underscores how deeply the AI narrative remains embedded in the price. Yet the gap between the share price and Wall Street’s fundamental expectations is widening. According to TipRanks, the average analyst price target for Intel stands at $82.70, implying a significant downside from current levels. Of the 24 analysts covering the stock, most rate it a “Hold,” and none issued a “Buy” upgrade alongside the recent rally.
Still, several banks have lifted their target prices in acknowledgment of the shifting landscape. Mizuho raised its price objective to $124, maintaining a “Neutral” stance and pointing to robust server demand driven by artificial intelligence. Deutsche Bank also increased its target to $100, while keeping a “Hold” recommendation. Bank of America, by contrast, is sticking to a more cautious $96 target and an “Underweight” call. Analyst Vivek Arya noted that while Intel’s foundry business holds long-term promise, volume production for a potential Apple partnership is not expected until 2028.
Should investors sell immediately? Or is it worth buying Intel?
The optimism among some investors runs deeper. Dan Niles of Niles Investment Management argues that Intel remains undervalued relative to the revolution in “Agentic AI” – autonomous systems that demand far more processing power than simple chatbots. As these systems proliferate, Niles predicts the ratio of central processing units to graphics processing units will shift from roughly one CPU per eight GPUs today toward one-to-one over time. That structural shift, he believes, could drive a sustained re-rating of Intel’s core processor business.
Intel’s first-quarter results offer some ammunition for both bulls and bears. Revenue rose 7% year over year to $13.6 billion, and adjusted earnings per share hit $0.29, above expectations. The data center and AI segment was a bright spot, with revenue jumping 22% to $5.05 billion, powered by demand for high-end server chips. However, the foundry division – the centerpiece of CEO Lip-Bu Tan’s turnround plan – posted an operating loss of $2.4 billion, even as revenue grew 16%. Heavy capital spending and depreciation on advanced manufacturing tools continue to drag on margins.
The macro environment has added another layer of uncertainty. US inflation data released on 12 May has stoked fears that corporate clients may stretch out their AI investment plans, a risk that hits high-multiple stocks especially hard. Intel’s upcoming appearances at investor conferences – first with CEO Tan at the J.P. Morgan Global Technology, Media and Communications Conference on 19 May, followed by CFO David Zinsner and investor relations chief John Pitzer at the BofA Global Technology Conference on 2 June – will be closely watched for signals on foundry margins, capacity plans, and the quality of recent demand.
For now, Intel remains a turnround story priced for perfection, but the tape is showing cracks. The duality is unmistakable: a 217% year-to-date gain sits alongside an average analyst price target that suggests a 30% drop. The market is betting on a transformational leap in Intel’s manufacturing fortunes, but the data – and a growing number of skeptics – argue that the leap has yet to be proven.
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