Intel: A Year of Static and Potential

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My Aunt Carol, a woman who believes strongly in the healing power of crystals and the inherent evil of 5G, recently asked me about Intel stock. “Is it a good thing?” she inquired, peering at me over her reading glasses. “My neighbor, Harold, he’s always going on about ‘chips.’ Sounds… unclean.” It’s a fair question, really. Intel, after a year that felt less like a soaring trajectory and more like a slightly uphill shuffle, has left investors, and my Aunt Carol, understandably perplexed. They shed 17% in a single session. It’s enough to make a person reconsider their entire investment strategy, or at least, take up a less stressful hobby, like competitive birdhouse building.

The stock had been up 111% over the past year, which is, admittedly, impressive. It felt like a late-stage party where everyone pretended the fun hadn’t already peaked. The optimism, fueled by promises of turnarounds and a surprising influx of cash from Nvidia, SoftBank, and the U.S. government (who, let’s be honest, are always looking for a good investment, or at least, the appearance of one), was…fragile. The recent guidance, though, was the equivalent of the band announcing they were taking a break mid-song. Investors, predictably, panicked. They started booking profits, as if anticipating a very long, awkward silence.

So, what does the next year hold? I’ve spent the last few weeks staring at charts, reading analyst reports (a truly soul-crushing experience), and trying to decipher the cryptic language of semiconductor manufacturing. It’s a world of “yields” and “nodes” and “wafer fabrication,” and frankly, it’s exhausting. It feels less like investing and more like advanced geometry homework.

The Fine Print and the Missing Pieces

Intel ended 2025 with $53 billion in revenue, which is…flat. Flat is a polite way of saying “not growing.” They managed to swing to a non-GAAP profit of $0.42 per share, which is good, except they were losing money last year. It’s like finally finding a matching sock after a month of searching. A small victory, but hardly cause for celebration. They’re trying to cut costs, naturally, by reducing their workforce. It’s a common strategy, really. Replace experienced employees with…hope.

The promise of AI, of course, is dangling like a particularly shiny carrot. Intel, like everyone else, wants a piece of the AI gravy train. They’ve partnered with Nvidia, which feels a little like asking your competitor to help you build a better mousetrap. But the stock, let’s be honest, was getting ahead of itself. It was trading at 88 times trailing earnings. That’s…ambitious. It’s like pricing a used toaster at the cost of a small yacht.

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When Intel announced break-even earnings for the current quarter, the panic set in. A year-over-year decline doesn’t exactly inspire confidence, especially when you’re already paying a premium. It’s like ordering a gourmet meal and receiving a plate of slightly stale crackers.

The problem, as far as I can tell, is twofold. First, they can’t make enough chips. Apparently, supply constraints are “meaningfully limiting” their ability to capitalize on market opportunities. It’s a classic case of wanting more than you can handle. Second, their chip production yields are…less than ideal. This means they’re producing a lot of defective chips. It’s like a bakery consistently producing burnt cookies. The 18A process, which is supposed to help them compete with Taiwan Semiconductor Manufacturing, is particularly problematic.

The good news, and I use that term loosely, is that yields are improving. They’re seeing a 7% to 8% improvement every month. That’s…progress, I guess. They estimate supply will start improving in the second quarter of 2026. That’s a long time to wait, especially in the fast-paced world of technology. But hey, at least they’re optimistic. Or, at least, they’re saying the right things.

Their data center and AI business is growing, which is encouraging. They recorded 15% sequential growth to $4.7 billion. That’s the fastest growth they’ve seen in a decade. And their custom AI processors are in demand. Sales jumped 50% from the prior-year period. It’s a small bright spot in an otherwise cloudy forecast.

I suspect the stock could regain some momentum as the year progresses, but only if Intel can convince investors that their turnaround story is still credible. It’s a tall order, but not impossible.

The Analyst Chorus and the Price of Optimism

Analysts, as usual, are divided. Most rate the stock as a hold, which is a polite way of saying “we’re not sure what to make of this.” Only 19% suggest buying. The 12-month price target is $45, which is almost exactly where the stock is trading now. It’s a bit like predicting that tomorrow will be mostly cloudy. Not exactly groundbreaking insight.

They’re expecting only a 16% increase in earnings this year, to $0.49 per share. That’s not exactly a rocket ship trajectory. But Intel could surprise everyone. They could work through their supply issues and deliver stronger-than-expected growth in 2026. Brokerage firm Northland Securities recently raised its price target to $54, citing conservative guidance. That’s a potential jump of 23%. It’s a gamble, of course, but sometimes, you have to take a chance.

My Aunt Carol, meanwhile, remains skeptical. “Harold says it’s all about the ‘silicon,'” she told me. “Sounds…dangerous.” I didn’t bother to explain. Some things, I’ve learned, are best left unsaid.

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2026-01-31 22:52