An Overpriced Stock to Avoid Even After Its Pullback

Intel’s stock has been blistering hot over the past 12 months: Shares of this no-moat tech company are up more than 100% versus a 17% return for the broad market in the past year. Enthusiasm for the stock picked up in late summer after SoftBank’s $2 billion investment, the US government’s pickup of a near-10% stake in the company, and word of a new partnership with Nvidia. “I think it’s gotten caught up in the AI buildout boom, but I don’t look at this company as really being a participant of the AI buildout boom,” said Morningstar Chief US Market Strategist Dave Sekera on a recent episode of The Morning Filter podcast, 3 Durable Stocks to Buy Now for the Long Term. Despite its recent pullback after a so-so earnings report, Intel stock looks very overvalued, trading 33% above our $32 fair value estimate.

Intel’s best days are behind it as the company strives to develop advanced processors—CPUs—in its products segment versus AMD AMD, Nvidia NVDA, and Apple AAPL, while its manufacturing arm is at a competitive disadvantage. While in this difficult position, the company is making the proper moves to close the gap, in our view. The best case for Intel will be to stop the bleeding in PC and server CPUs while receiving support from outside investors to get Intel Foundry back on solid footing. We think Intel’s future will hinge on its ability to develop the Intel 14A manufacturing process within Intel Foundry, to not only build leading-edge processors internally but, more importantly, attract external chip designers.

Key Morningstar Metrics for Intel

• Fair Value Estimate: $32
• Star Rating: 2 Stars
• Economic Moat Rating: None
• Uncertainty Rating: Very High

Economic Moat Rating

We don’t believe Intel has an economic moat. The company’s returns on invested capital have fallen in recent years, and we do not foresee excess returns on capital in the years ahead. The deterioration stems from the company’s manufacturing struggles and hefty investment in new manufacturing processes. Intel’s chip design team has decades of experience in processor designs, which could warrant a narrow moat rating in isolation. However, we view the chip manufacturing business as being at a cost and technological disadvantage today, as the company has stumbled and lost its lead to TSMC TSM. In our view, Intel’s manufacturing headwinds more than offset any competitive advantages that its chip design expertise may warrant.

Read more about Intel’s moat rating.

Fair Value Estimate for Intel Stock

Our $32 fair value estimate implies a 2026 price/earnings multiple of 32 times. We anticipate that strong demand for server CPUs used as part of the artificial intelligence buildout will lead to growth for Intel in 2026, which we model at 6%. We model growth of 8%, on average, from 2027 through 2030, thanks to healthy server CPU demand and as Intel gains external foundry customers. We model a 35% GAAP gross margin in 2026, expanding to 50% in 2030, as Intel moves production to TSMC while improving its foundry business. On a non-GAAP basis, we model a 38% gross margin in 2026, expanding to 51% in 2030. We foresee a 4% GAAP operating margin in 2026 and improvement to 25% in 2030. On an adjusted operating margin basis, we expect a 9% margin in 2026 and a recovery to 29% in 2030.

Read more about Intel’s fair value estimate.

Risk and Uncertainty

Intel continually faces execution risk associated with keeping pace with Moore’s law and creating cutting-edge processors, both in terms of chip design and chip manufacturing. On the latter front, Intel stumbled in recent years, causing it to lose market share and suffer notable operating losses. We foresee execution risk associated with Intel’s aggressive plans to achieve five processor nodes in four years. In PCs as well as data centers, Intel is squaring off against the AMD/TSMC partnership. We also see a risk of Microsoft pushing Windows toward greater compatibility with ARM-based processors. All the while, the PC market remains cyclical, and Intel will have to navigate the cycles accordingly.

Read more about Intel’s risk and uncertainty.

Intel Bulls Say

• Intel is one of the largest semiconductor companies in the world and still holds leading share in the PC and server processor markets.
• The Intel Products business segment has an innovative, profitable design team, and shifting more production to TSMC might enable it to fend off recent market share losses.
• Intel Foundry is one of only three companies that can come close to building leading-edge processors. Additional financial support might enable the business to emerge as a viable manufacturer down the road.

Intel Bears Say

• There are no guarantees that Intel can execute on its manufacturing aspirations, such as the release of Intel 14A in 2028 or 2029.
• Even if Intel can improve its manufacturing road map, AMD is now a far more credible chip designer in the x86 space for PC and server CPUs, while ARM-based CPUs are a much greater threat than in years past.
• Nvidia’s GPUs have captured most of the AI accelerator market, and we don’t foresee Intel making a dent here anytime soon.

This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of Jan. 26, 2026, close unless otherwise noted.