Intel finds itself at a crucial juncture. A significant rally that saw its shares more than double from their lows six months ago is now encountering headwinds. A combination of institutional selling, analyst caution regarding valuation, and persistent multi-billion dollar losses in its foundry division are prompting a wave of profit-taking. The central question for the market is shifting from whether new CEO Lip-Bu Tan can execute a turnaround to whether investor patience is wearing thin.
Valuation Concerns Mount Amid Strategic Bets
The equity’s advance appears to have run ahead of near-term fundamentals. Intel is currently trading at nearly 50 times its estimated 2027 earnings, a premium that contrasts with analyst forecasts which only point to a meaningful profit doubling next year. After reaching a 52-week high of $54.60, the stock has pulled back, recently trading around €39.14. This price action signals a clear trend of investors locking in gains following the substantial run-up.
The company’s strategic pillars—its x86 architecture for data centers, developing AI accelerator chips to compete with Nvidia and AMD, and building U.S.-based foundry capacity—have successfully attracted both government support and private backers like Nvidia and SoftBank. However, the upcoming quarterly report on April 23, 2026, will be a critical test of Intel’s ability to justify these high expectations.
Institutional Skepticism Emerges
A notable shift in sentiment is visible among major investors. M&G PLC reduced its Intel holding by 11% in the third quarter, selling nearly 70,000 shares. Its remaining position of 564,060 shares is valued at approximately $19 million. This move aligns with a cautious analyst landscape. In mid-February, DA Davidson initiated coverage with a neutral rating and a $45 price target, acknowledging progress while highlighting ongoing execution risks.
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Concurrently, a sector rotation appears to be working against Intel. While semiconductor equipment suppliers like Applied Materials and pure-play foundries such as TSMC have seen gains, Intel and Nvidia have faced pressure. The current investor preference seems to favor the suppliers and contract manufacturers over the chip designers themselves.
The Persistent Foundry Challenge
The core of Intel’s operational struggle remains its foundry business. In the fourth quarter of 2025, this segment generated $4.5 billion in revenue but reported an operating loss of $2.5 billion, equating to an operating margin of negative 50%. These figures underscore the vast distance Intel must still travel to achieve a profitable contract manufacturing operation.
CEO Lip-Bu Tan has consistently emphasized that the transformation will be a multi-year endeavor. The challenges are compounded not only by Intel’s internal capacity issues but also by industry-wide shortages in memory chips and substrate wafers, which are driving up costs across the sector.
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