Why the party for Intel and other chip stocks could last a long time

By Philip van Doorn

Also in Weekend Reads: A five-year retirement plan, ideas for investors and traders, and advice from the Moneyist

Intel's stock soared early on April 24 after the company reported its first-quarter results.

The semiconductor industry has always been cyclical - not only as a whole, but for particular specialties within the sector and even for individual companies.

Intel (INTC) has been going through a long-term turnaround effort. The company has a ways to go before its profitability returns to a normal level. But the stock market always looks ahead: Intel's stock was up 81% for 2026 through Thursday, before the company announced its first-quarter results.

Read: Intel's stock extends its spectacular run - and could see its best daily gain on record

Those results were quite a surprise and included a significant expansion of Intel's gross profit margin, along with a revenue figure that blew past what analysts were expecting as sales of the company's server chips soared.

The surprise sent Intel's shares up another 25% early on Friday. And even after that run-up, the stock still appeared to be an inexpensive way for investors to jump into the semiconductor space amid the continuing supply/demand imbalance.

Heading into earnings, Intel was trading at a much lower forward price/sales ratio than other semiconductor manufacturers with broad product lines, including Nvidia (NVDA), Broadcom (AVGO) and Advanced Micro Devices (AMD). Charles Lemonides, the founder and chief investment officer of ValueWorks in New York, said earlier this week that Intel was the best way for investors to participate in the AI-driven demand spike for computer hardware.

So now you might wonder how Intel's valuation was looking after the stock popped on Friday.

A stock's forward price/sales ratio is its market capitalization divided by the consensus 12-month revenue estimate among analysts polled by LSEG. The forward price/earnings ratio is the share price divided by the consensus 12-month earnings-per-share estimate.

Now let's look at updated forward valuations for the largest 10 holdings of the iShares Semiconductor exchange-traded fund SOXX based on share prices and consensus estimates as of 9:45 a.m. Eastern time on Friday. The table also includes projected compound annual growth rates for revenue from calendar 2026 through 2028. The estimates are adjusted by LSEG for companies (such as Nvidia) whose fiscal reporting periods don't match the calendar.

   Company                      Forward price/ sales  Forward price/ earnings  Est. sales CAGR from 2026 through 2028  Est. EPS CAGR from 2026 through 2028 
   Nvidia                                       12.4                     22.0                                   26.2%                                 28.6% 
   Broadcom                                     14.7                     28.0                                   35.6%                                 34.7% 
   Micron Technology                             3.6                      5.9                                    9.5%                                 -0.2% 
   Advanced Micro Devices                       10.5                     41.1                                   35.3%                                 45.4% 
   Applied Materials                             9.5                     32.9                                   12.9%                                 15.8% 
   Marvell Technology                           11.8                     38.8                                   30.3%                                 37.6% 
   Intel                                         7.1                     73.6                                    9.3%                                 64.9% 
   KLA                                          15.5                     39.5                                   13.0%                                 17.3% 
   Monolithic Power Systems                     21.8                     69.4                                   16.7%                                 20.8% 
   Teradyne                                     14.0                     56.4                                   21.7%                                 35.7% 
                                                                                                                                               Source: LSEG 

Intel's forward P/E ratio remains high because the company is still going through a turnaround that includes the construction and operating shakedowns of many new semiconductor fabrication facilities. But its updated forward price/sales ratio of 7.1 is still low when compared with those of Nvidia, Broadcom and AMD.

Related: Broadcom just became the sixth company in U.S. history to achieve this feat

The only stock on the list with a lower forward price/sales ratio is Micron (MU), which is also cheapest on a forward P/E basis. But Micron is also the only company on the list for which 2028 earnings per share are expected to be lower than those for 2026.

Read: The historic surge in chip stocks highlights Micron's valuation, and a related warning

SOXX, which tracks the PHLX Semiconductor Index SOX by holding all 30 of its stocks, itself appears to be attractively priced, considering the strong demand for chips. Even after a record 17-day rally, SOXX's portfolio has a forward P/E of 24.1, as calculated by LSEG, compared with a forward P/E of 20.8 for the S&P 500 SPX.

A different opinion: There's never been a semiconductor rally like this one - and that's triggering a number of warnings

Tim Cook's success

Tim Cook will step down as Apple's CEO after 15 years at the helm.

Tim Cook surprised investors earlier this week when he announced he would give up his role as CEO of Apple (AAPL) on Sept. 1, while staying on as the company's chair. John Ternus, Apple's senior vice president of hardware engineering, will take over as the new CEO. Here is related coverage:

-- Tim Cook's secret weapon that turned Apple into a $4 trillion empire

-- This is what critics of Apple and Tim Cook get dead wrong

-- Three tests Apple's new CEO must pass to prove he can grow the company in ways Tim Cook never did

More coverage of Big Tech and AI

Christine Ji explained how Anthropic's Mythos AI model underscores the threat of a new wave of cybercrime.

William Gavin looked into Tesla's plan to address complaints from customers who were promised updates to their older electric vehicles to give them self-driving capability, only to be disappointed.

Market froth: Investors rediscover a taste for extremely speculative stocks as market rips higher in April

Tactics for traders: Cheap stock options suggest a big post-earnings swing next week for Meta and other tech titans

Look abroad: Here's a smart way to beat the U.S. stock market - and 10 ETFs to get you there

A five-year plan

Retirement can sneak up on you. It might be best to plan for it to happen early.

Beth Pinsker writes the Fix My Portfolio column, through which she helps MarketWatch readers with various strategies to invest, prepare for retirement and manage their tax burdens.

This week Beth announced her plan to retire in five years. Here is her advice on what anyone planning for retirement should consider.

More from Beth Pinsker: I went to an Advanced Placement personal-finance class. Here's what I learned.

What to do if you are offered a buyout

Reuters reported that Meta Platforms (META) was planning to lay off 8,000 employees. And Microsoft (MSFT) is preparing to offer retirement buyouts to up to 7% of its employees, according to a CNBC report.

According to CNBC, the Microsoft buyouts were to be offered to employees whose combined age and years of service was at least 70. A Microsoft spokesperson confirmed that the company had sent a memo to employees about retirement buyouts, but didn't provide any details.

Hannah Pedone and Aditi Shrikant looked into the prospects of an increasing number of corporate buyout offers in a stagnant labor market. Here are some things to consider if you are offered a buyout.

Crude oil and fuel prices

As the conflict between the U.S. and Iran simmers, investors and consumers are wondering what to expect for oil and fuel prices. Here is a sampling of MarketWatch's coverage:

-- Energy stocks are trouncing the rest of the stock market in 2026. Why the Iran war could erode those gains from here.

-- Gas prices matter for households. They still look too low for Trump to give in to Iran right now.

-- Why a spike in oil prices will hurt the U.S. more than China

-- Halliburton's outlook backs one analyst's view to buy oil-service stocks now

-- The current oil shock most resembles the first Gulf War, says UBS. What that means for prices.

-- Flight cuts are spreading as fuel costs surge - and higher summer fares look likely

Private-credit worries and a market contradiction

Joy Wiltermuth reported on how the flow of investors' money was flying in the face of worries over private credit.

Read on: Private funds with high fees are coming for your 401(k) - and Trump's acting labor secretary is cheering them on

When (not) to file an insurance claim

Don't Short Yourself - MarketWatch's new weekly newsletter - offers smart tips to help you earn and grow your money.

In this week's Don't Short Yourself newsletter, Andrew Keshner shared his experience after a tree branch fell and damaged his backyard fence. He had to decide whether or not to file a homeowners insurance claim. Here's what he learned, and what he decided to do.

Advice from the Moneyist

Quentin Fottrell is the Moneyist.

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