Intel stock forecast: What’s next for INTC after poor earnings?
The price of Intel (INTC) stock fell by over 8% on 29 July following the release of the firm’s earnings report covering the second quarter of the 2022 fiscal year as the tech company trimmed its revenue and earnings guidance for the entire year.
Intel also reported a 22% decline in revenues, a 20.6% drop in gross margins and negative net profitability compared to a year ago on a GAAP basis.
Will the deterioration of the business’s financial performance put pressure on analysts’ Intel stock predictions?
In this article, we analyse the historical INTC stock price performance and cover the major price drivers that can affect its further moves.
Intel Corporation: Leading CPU producer
The Intel Corporation was founded in 1968 by two engineers. It has been a pioneer in many areas of the tech industry, developing innovative products and solutions, from memory chips to processors.
Intel is currently the market leader in the x86 computer central processing units (CPUs) business with a market share of 63.6%, as per data from Statista.
The company’s most important revenue segments are Client Computing (CCG), Data Center and AI (DCAI), and Network and Edge (NEX).
The CCG segment focuses on products that power consumer electronics devices such as smartphones, laptops and desktops. The DCAI segment primarily caters to data centres, while the NEX segment is focused on the sale of products for telecommunication devices.
In 2021, Intel produced total revenues of $74.7bn and operating income of $22.2bn. The company’s CEO is Pat Gelsinger, who took the post in February 2021. According to Statista, Intel employs over 120,000 people across the world.
Intel stock analysis: Latest performance
So far this year, the INTC stock price has declined 28.4%, while the tech-heavy US Tech 100 Index (US100) and the S&P 500 Index (US500) have fallen 20.7% and 13.3% respectively during that same period.
The company’s negative performance can be attributed to changes in macroeconomic conditions as major central banks across the world have taken hawkish actions such as raising interest rates to contain the pace at which inflation is rising.
In addition, competition from Intel’s top rivals – Advanced Micro Devices (AMD) and NVIDIA (NVDA) – is heating up. While the company is still the leader of the CPU market, it is struggling to maintain market share in various other markets such as graphic processing units and data centre products.
Finally, an increase in the costs of raw materials and the ongoing supply chain crisis have weighed on the company’s ability to meet the demand of its most important customers such as PC manufacturers and big auto firms.
Intel stock analysis: Historical performance
In the past ten years, Intel stock value has underperformed the two benchmark indices, S&P 500 and US Tech 100. During that period, the US Tech 100 Index delivered gains of 389.1% resulting in a compounded annual growth rate (CAGR) of 17.2% as per data from Koyfin.
Meanwhile, the S&P 500 produced total gains of 198% for an 11.5% CAGR while the INTC stock price appreciated by only 87.3% resulting in a 6.5% CAGR within those 10 years.
The price action for Intel stock has been quite volatile since the beginning of 2018. During that period, the stock hit all-time highs of around $68 twice but also experienced major declines shortly after hitting that milestone.
The first time, the decline was prompted by the pandemic as market participants sold off INTC due to fears that the firm’s financial performance would suffer amid restrictions imposed by governments to contain the spread of the virus.
The Intel stock market price recovered shortly afterwards as demand from data centres rose on the back of higher cloud computing activity. However, macroeconomic headwinds and the firm’s struggles to keep up with the demand for its products in a post-Covid environment put pressure on the stock and plunged the price to its lowest level in nearly five years.
Will Intel stock recover?
Key price drivers to watch
Moving forward, the following could be some important factors to consider when drafting an Intel share price forecast:
Intel’s ability to maintain its leadership in its most important markets.
Macroeconomic conditions. If the Federal Reserve (Fed) and other central banks opt to keep raising interest rates while adopting more hawkish measures this could put more pressure on the performance of INTC stock.
Covid lockdowns in China may affect the firm’s manufacturing capacity as Intel has production and research facilities in that country. In addition, Intel has operations in various countries within Europe that could be affected by an escalation in the armed conflict between Russia and Ukraine.
Higher inflation could lead to lower demand for consumer electronics (PCs, laptops, smartphones) and that could have an immediate impact on the top-line performance of Intel’s CCG business segment – the largest in terms of revenue.
INTC stock news: Latest earnings
On 28 July, Intel Corporation reported its financial results covering the second quarter of the 2022 fiscal year. During the three months ended on 2 July, Intel reported GAAP revenues of $15.3bn resulting in a 22% year-on-year decline.
The CCG segment performed poorly during this period as sales dropped 25% while the DCAI segment also experienced a 16% decline. Finally, the NEX segment partially offset some of this negative performance as sales from this business unit went up by 11%.
During that same period, the firm’s GAAP gross margins declined from 57.1% to 36.5%, while its GAAP operating margin went down from 28.3% to minus 4.6%.
As a result, the company reported GAAP net losses of $500m compared to $5.1bn in earnings it brought during Q2 2021. Meanwhile, Intel reported negative EPS of $0.11 compared to the $1.24 it reported during the same period a year ago.
For the entire 2022 fiscal year, Intel is expected to produce revenues ranging from $65 to $68bn and GAAP earnings per share of $2.57. Previously, the company’s guidance for the year pointed to total revenues of $76bn and GAAP earnings per share of $4.19.
Intel stock forecast 2022 – 2025
Commenting on the company’s latest earnings results and potential Intel stock future price, Abhinav Davuluri, a sector strategist at Morningstar, said:
According to data compiled by MarketBeat as of 1 August, the consensus recommendation for INTC stood at hold with 11 out of 23 analysts having rated the stock as such. Notably, eight analysts have rated INTC stock a ‘sell’, and only four gave it a ‘buy’ recommendation.
The consensus Intel stock price target was $44.75 per share, resulting in a 23.2% upside potential based on 29 July’s closing price of $36.31. The highest 12-month Intel stock forecast was at $72 and the lowest at $30.
Several financial services firms lowered their baseline 12-month INTC stock forecast following the release of the company’s latest financial report.
Aside from the analysts’ expectations, Wallet Investor, an algorithm-based forecasting service, estimated INTC as a “not so good long-term (1-year) investment”, based on technical analysis of the Intel historical stock price.
According to the algorithm’s Intel stock forecast 2022, as of 1 August, INTC could end the year at $38.680.
Looking forward, Wallet Investor estimated the stock to move slightly down to $36.731 by the end of 2023 and $34.991 by the end of 2024.
Its Intel stock forecast for 2025 expected the stock to trade at $33.030 by the end of the year. According to its five-year Intel stock projection, the stock could go below $30 and hit $29.900 in July 2027. Wallet Investor didn’t provide an INTC stock forecast for 2030.
When looking at Intel stock predictions, it’s important to bear in mind that analysts’ and algorithm-based targets can be wrong. They are based on an analysis of the INTC share price history. Past performance never guarantees future results.
It’s important to do your own research and read the latest market news. Your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. You should never trade more than you can afford to lose.
FAQs
Is Intel a good stock to buy?
Intel is a leader in the CPU market but its competitive situation has been hurt lately by rivals, AMD and NVIDIA. The future of the company, and hence the value of its stock, could also depend on how macroeconomic conditions evolve in the next few months. A final resolution to the supply chain crisis may also play a key role in shaping the valuation of this tech company.
Note that any Intel stock forecast and opinion shared above should not be considered a recommendation to buy or sell this tech stock. Traders are encouraged to perform adequate due diligence before making any trading decision. And never invest money that you cannot afford to lose.
Will Intel stock go up or down?
According to the consensus INTC stock forecast compiled by MarketBeat as of 1 August, the price of this tech stock could rise by more than 20% in the next 12 months. However, there were mixed opinions in regards to INTC’s outlook as several analysts have also rated the stock a sell and lowered their price target lately.
Is Intel stock a ‘buy’, ‘sell’ or ‘hold’?
The majority of the analysts surveyed by MarketBeat rated INTC stock a hold (as of 1 August 2022). However, eight out of 23 analysts rated the stock a ‘sell’ and only four considered it a ‘buy’.
Should I invest in Intel stock?
The decision to trade or invest in Intel stock should only be made after performing adequate due diligence on the company, its fundamentals, and prospects. And never invest money that you cannot afford to lose.
Markets in this article
