Intel Corporation (NASDAQ: INTC) experienced a slight decline in premarket trading on Thursday, with shares slipping 1.17% to $99.88. This modest dip comes despite a significant upward revision in profit forecasts for 2026, which have surged by 38% over the past month to $1.49 per share, according to FactSet.
The stock's recent rally, which saw it close above $100 for two consecutive sessions, remains intact. On Tuesday, Intel shares surged 10.8%, and Wednesday's session saw a slight gain of 0.2%. However, the broader semiconductor sector showed weakness, as the iShares Semiconductor ETF (NASDAQ: SOXX) slipped 0.59% ahead of the open.
Analysts have become notably more optimistic about Intel's earnings potential following the company's second-quarter report on July 23. Revenue for the quarter reached $16.13 billion, exceeding LSEG consensus estimates by 11.9%. Adjusted earnings per share came in at 42 cents, doubling analyst expectations. The company also provided stronger-than-expected third-quarter guidance, with a revenue midpoint of $16.3 billion (7.9% above consensus) and adjusted EPS of 38 cents (40.7% above estimates).
The upward revisions extend beyond the current quarter. According to FactSet, the consensus EPS forecast for Q3 2026 has been raised by 46% to $0.38, while Q4 2026 estimates jumped 35% to $0.42. Full-year 2027 projections have also increased by 30% to $2.04, indicating that analysts see sustained demand and improved operating leverage, not just a temporary supply boost.
Despite these positive earnings revisions, Intel's valuation remains elevated. At Wednesday's closing price of $101.06, the stock trades at 67.8 times its current-year EPS estimate of $1.49. This is significantly higher than competitors like Nvidia (NASDAQ: NVDA), which trades at 24.4 times its estimate, and TSMC (NYSE: TSM) at 24.9 times. AMD (NASDAQ: AMD) also commands a high multiple at 63.3 times.
Analyst recommendations show a cautious stance, with 31 out of 54 ratings at Hold, according to FactSet. The median price target stands at $118, implying a 16.8% upside from Wednesday's close, while the mean target is $121.72. UBS analyst Timothy Arcuri noted that CEO Lip-Bu Tan "doesn't need much share to add multiple billions of revenue," reflecting optimism about the company's AI and foundry opportunities.
Intel's data center and AI revenue surged 59% to $6.3 billion, and its foundry segment revenue grew 31% to $5.8 billion. However, cash flow remains a concern. The company reported $7.0 billion in operating cash but a negative adjusted free cash flow of $8.4 billion. A $12.5 billion mark-to-market charge contributed to a GAAP net loss of $11.0 billion.
The semiconductor sector showed mixed performance on Wednesday, with AMD dropping about 7% after its forecast disappointed investors, while Nvidia rose 3.4%. Bernstein analyst Stacy Rasgon noted that Intel's strong performance had raised sector expectations. Looking ahead, Intel is not scheduled to hold an investor event next week, but upcoming U.S. economic data, including CPI on August 12, PPI on August 13, and retail sales on August 14, could influence interest rate expectations and chip stock valuations.
Key risks for Intel include transforming constrained supply and strong AI-driven demand into sustained cash flows, as well as securing significant external buy-in for its 14A foundry process. Substantial investment requirements, supply constraints, and intense competition could hinder the company's recovery.
