Time to Buy, Hold, or Sell Intel Stock as Q2 Earnings Approach?

Intel (INTC) faces a critical Q2 earnings report on July 24, with its stock up 15% year-to-date but still significantly trailing competitors over three years. While CEO Lip-Bu Tan is implementing a "bold turnaround strategy" focused on foundry restructuring, talent acquisition, and aggressive AI pricing, Q2 sales are projected to dip 7% to $11.87 billion and EPS to $0.01. Critically, future earnings estimates for FY25 and FY26 have seen substantial downward revisions, with FY26 estimates dropping 37% in three months, leading to a Zacks Rank #4 (Sell) and suggesting the recent rally may be unsustainable ahead of the pivotal Q2 results.

Analysis

Intel (INTC) faces a critical juncture ahead of its Q2 earnings release, with a notable disconnect between its recent stock performance and underlying financial outlook. While the stock has rebounded 15% in 2025, it remains down 40% over the last three years, significantly underperforming competitors like Nvidia and AMD. The company's new CEO, Lip-Bu Tan, has initiated a "bold turnaround strategy" focused on restructuring the foundry business (IFS) to compete with TSM, overhauling talent, and aggressively pricing its Gaudi 3 AI accelerator to gain market share. However, this strategic optimism is undermined by weak near-term expectations, with Q2 sales projected to decline 7% year-over-year to $11.87 billion and earnings per share to fall to $0.01. The most concerning signal is the sharp downward revision of future earnings estimates; FY25 EPS projections have been cut from $0.50 to $0.27 in the last 90 days, and FY26 estimates have plunged 37% in the same period. This negative trend in analyst revisions, culminating in a Zacks Rank #4 (Sell), suggests the recent stock rally may be unsustainable and places immense pressure on the upcoming Q2 report to validate the turnaround narrative.

Key Decisions for Investors

• Given the significant downward revisions to FY25 and FY26 earnings estimates, investors should treat the recent 15% stock rally with extreme caution, as it appears disconnected from deteriorating fundamentals.
• It may be prudent for investors to consider reducing exposure or hedging positions ahead of the July 24th earnings report, which carries a high risk of a negative market reaction if results and guidance confirm the bearish analyst outlook.
• Long-term investors should closely monitor the Q2 results for tangible evidence of progress in the foundry services division and market adoption of the Gaudi 3 AI chip, as these are critical pillars for any sustainable recovery.