Intel Shares Are Down 40% Since Earnings. Is the Stock a Buy Now?

Intel released its third-quarter earnings report on Oct. 29. Here’s Morningstar’s take on Intel’s earnings and stock.

Key Morningstar Metrics for Intel

• Fair Value Estimate: $85.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of Intel’s Q3 Earnings

Intel reported third-quarter revenue of $16.5 billion, up 21% year over year and above its $16.3 billion guidance midpoint. Intel expects December quarter revenue of $15.5 billion, up 13% year over year but short of FactSet consensus estimates of $17.3 billion.

Why it matters: Intel gave investors an ugly outlook because weak demand for PC processors, while higher memory chip prices are suppressing unit demand. Intel expects PC unit sales to decline 12% in 2026 (down 20% in the second half of 2026) and another 10% in 2027.

• Despite the focus on artificial intelligence and Intel’s manufacturing (Foundry) business, its PC business still accounts for 50%-60% of revenue in a normal quarter. Intel doesn’t expect the memory crunch to abate soon (nor do we). Intel forecasts total revenue growth in 2027, but PC softness will stunt it.
• We remain encouraged with Intel’s server CPU business and agentic AI demand, as its data center segment revenue rose 17% sequentially and 78% year over year. However, Intel remains supply-constrained in server CPU manufacturing and substrates, which may cap its near-term upside.

The bottom line: We lowered our fair value estimate for no-moat Intel to $85 per share from $105 as we cut our near-term PC CPU revenue estimates.

• Shares fell nearly 30% after earnings on the soft outlook, and we think the selloff was largely justified. We think shares are modestly undervalued, but we retain our Very High Morningstar Uncertainty Rating and acknowledge a host of risks as Intel remains in turnaround mode.

The following are excerpts from Morningstar’s company report on Intel.

Fair Value Estimate for Intel

With its 4-star rating, we believe Intel’s stock is moderately undervalued compared with our long-term fair value estimate of $85 per share. Intel should generate strong growth of 17% in 2026, thanks to exploding demand for server CPUs as part of the agentic AI buildout. We think there is more to come in the years ahead, despite near-term PC weakness, and we model total revenue CAGR of 17% over the next five years and 12% over the next 10 years.

Intel’s manufacturing missteps and a soft PC market caused GAAP gross margin to crater from 62% in 2018 to 35% in 2025. We think this is the bottom for Intel’s business as we model a 40% GAAP gross margin in 2026, expanding to 49.5% in 2030 and 57.5% by 2035.

Read more about Intel’s fair value estimate.

Economic Moat Rating

We do not assign Intel a 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 firm’s manufacturing struggles and hefty investment in new manufacturing processes. If Intel were to perfectly execute on its aggressive technological road map, it may warrant an economic moat rating in the future. However, this outcome is likely years down the road with no guarantee of success.

Intel’s chip design team has decades of experience in processor designs, mostly around central processing units, which could conceivably warrant a narrow moat rating as a stand-alone, asset-light business. However, we view the chip manufacturing business as being at a cost and technological disadvantage today, as the firm has stumbled and lost its lead to TSM, the world’s largest foundry. 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 economic moat.

Financial Strength

Intel is in a decent financial position after prior years of shakiness, in our view. As of September 2026, Intel held $54.0 billion of cash and investments, compared with $50.1 billion of debt. On the upside, Intel completed a $23 billion equity raise to shore up its balance sheet in 2026. On the downside, Intel regularly earned $10 billion-plus in free cash flow per year in its heyday but has been free cash flow negative (unadjusted) in recent years. Intel expects to be free cash flow negative again in 2027 as it invests in chip manufacturing equipment for future growth.

Read more about Intel’s financial strength.

Risk and Uncertainty

We assign Intel an Uncertainty Rating of Very High. The company 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.

In PCs, Intel now squares off against a more formidable AMD, which has adopted chiplet designs and partnered with TSM to develop high-end processors on par with (or better than) Intel’s recent offerings. In the data center, Intel again faces execution risk against the TSM/AMD partnership to stop its recent market share bleeding, as well as the risk of ARM-based processors gaining prominence.

Read more about Intel’s risk and uncertainty.

INTC Bulls Say

• Intel is one of the largest semiconductor companies in the world and still holds a 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 TSM might let it 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.

INTC 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 roadmap, 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 Colin Laidley.