Intel's explosive stock gains this year are unsustainable, a new bear warns

By Britney Nguyen

HSBC sees 35% downside potential for Intel's stock, cautioning that the company would need a technology deal with TSMC to spark a true turnaround - and that looks unlikely

HSBC analysts issued a downgrade for Intel's stock on Wednesday.

Intel Corp.'s stock is up 85% so far in 2025 to rank among the S&P 500's best year-to-date performers. But one analyst isn't sure the party will go on for an extended period.

Investors once viewed Intel's stock (INTC) with skepticism, given the company's struggles to keep pace technologically or work out the economics of restarting a foundry business. Now the stock has undergone "a substantial re-rating" - meaning that Wall Street has come to assign it a higher valuation multiple - in the wake of deals with SoftBank Group Corp. (JP:9984), the U.S. government and Nvidia Corp. (NVDA), entities that are now Intel investors.

Since SoftBank said in August that it would take a $2 billion stake in the company, Intel's stock is up 55%.

See more: Intel is one of the hottest chip stocks this year. Here's where things stand now.

But HSBC analysts worry that Intel isn't out of the woods, which could create pressure on the stock down the road. The company's "own fab execution remains key to any sustainable turnaround," the analysts said on Wednesday, referring to Intel's chip-fabrication plants.

The rally in Intel shares looks "overdone," according to HSBC. While they acknowledged the potential for a "short-term re-rating," the analysts worry about the rally's sustainability and moved from a hold rating on the stock to a reduce rating.

HSBC's new price target of $24 on the stock implies about 35% downside from the $37.17 closing level on Tuesday.

The only deal that the HSBC team sees "fundamentally" changing Intel's situation would be "one involving technology sharing" with its manufacturing rival, Taiwan Semiconductor Manufacturing Co. (TW:2330). That seems unlikely to the analysts, however, because the Taiwanese chip maker is already investing more than $100 billion to bring its manufacturing and production to the U.S.

After reports that Intel is seeking further investments from Apple Corp. (AAPL) and TSMC, the analysts said they "would not be surprised" to see more deals play out with its semiconductor peers, "including a passive investment by TSMC itself." But a monetary deal is less important than a technology-oriented one.

Read: Will Apple deliver Intel its next lifeline? Here's why analysts think a deal would make sense.

Intel's foundry business "remains the biggest drag on financials with consistent execution failures," the analysts said. They also noted Intel's own uncertainties over its next-generation 14A processor node. The company said in a 10-Q filing earlier this year that it could stop developing and manufacturing the process node and subsequent ones if it doesn't find an external customer for the 14A.

Meanwhile, Nvidia said that its collaboration with Intel to design and manufacture chips doesn't impact its relationship with Arm Holdings PLC (ARM), and that it will continue to use the British chip company's central-processing-unit architecture in its upcoming Rubin platform and following ones, "implying Arm-based CPUs in Nvidia's [NVLink] racks" until the end of 2029, the analysts said.

"Hence, we believe there is not enough clarity and visibility to quantify this opportunity," they said.

-Britney Nguyen

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10-08-25 0924ET