Intel is surging after results. Here’s what top analysts are saying to do from here

Intel exceeded third-quarter revenue expectations with $13.65 billion, driving an 8% premarket share increase and a 25% year-to-date rally, yet its fourth-quarter revenue guidance of $13.3 billion slightly missed forecasts. Wall Street analysts largely maintained a cautious to negative stance, primarily citing concerns over the significant capital investment and lack of major customer for Intel's Foundry business, which reported a 2% sales loss, alongside persistent competitive pressures from AMD and anticipated margin challenges.

Analysis

Intel reported third-quarter revenue of $13.65 billion, surpassing analyst expectations of $13.14 billion, which initially drove an 8% premarket stock increase and a 25% year-to-date rally. However, its fourth-quarter revenue guidance of $13.3 billion at the midpoint fell slightly below forecasts of $13.37 billion, tempering the positive sentiment. Adjusted EPS guidance for Q4 met expectations at 8 cents.

A significant concern highlighted by analysts is Intel's Foundry business, which requires a substantial $100 billion capital investment and has yet to secure a major external customer. This division reported $4.2 billion in Q3 sales, marking a 2% year-over-year loss, contributing to a "negative to neutral" analyst stance on the stock. Citi specifically recommends exiting the merchant foundry business, citing minimal chances of success.

The competitive landscape remains challenging, with JPMorgan anticipating further share loss to AMD in PC/client and server markets over the next 12-18 months. Bank of America points to gross margin pressure, guiding to 36.5% for Q4 (down 350bps QoQ), and notes subscale manufacturing and a lack of an AI accelerator. Analysts generally view the stock as pricing in future success that is not yet evident, with financial improvements expected to be a multi-year process.

Key Decisions for Investors

• Monitor Intel's Foundry business closely for any major customer announcements or shifts in its capital intensity, as this remains a primary long-term risk and valuation driver.
• Evaluate Intel's competitive positioning against AMD and its progress in the AI accelerator market, given analyst concerns about potential continued market share erosion and margin pressures.
• Consider the cautious to negative analyst sentiment and the multi-year timeline for financial improvements, suggesting a potentially event-driven stock in the near term rather than a fundamental re-rating.