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SUMMARY
Parkev Tatevosian, CFA, analyzes Intel's recent performance and the implications for investors as the company prepares to release its quarterly results. He discusses Intel's revenue growth, cost-cutting measures, and the extent to which future prospects are already reflected in the current stock price.
MAIN POINTS
- Intel shares have risen over 205% in 2026, prompting questions about whether it is too late to buy before the upcoming earnings announcement.
- Intel reported 7% revenue growth and improved gross margins, though bottom-line losses were driven by restructuring charges.
- Significant cost-cutting measures, including laying off about 20,000 employees, have helped narrow Intel's negative free cash flow.
- Intel's current revenue and profit margins remain below peak levels, but higher utilization of existing manufacturing capacity could drive future profitability.
- Much of Intel's anticipated growth appears already priced into the stock, with a forward P/E of 103 and a market price well above calculated fair value.
- A live earnings review will be available exclusively to channel members following the July 23rd, 2026 results release.
DETAILED ANALYSIS
Intel has experienced a dramatic rally in 2026, with its share price increasing by more than 200%. This surge is largely attributed to investor optimism about the company's role in the expanding artificial intelligence (AI) and data center markets. Intel's CPUs are benefiting from a shift in demand as AI applications proliferate, with the company maintaining a strong position in data center CPUs despite trailing AMD and facing fierce competition from Nvidia.
In the most recent quarter, Intel achieved a 7% year-over-year revenue increase to $13.6 billion and improved its gross profit margin to 39.4%. However, restructuring charges totaling $4.07 billion resulted in significant operating losses. Excluding these charges, Intel would have posted approximately $900 million in operating income, a notable turnaround from the prior year's losses.
The company has aggressively cut costs, reducing its workforce by around 20,000 employees compared to the previous year. These efforts, combined with narrowing the gap between cash flow from operations and capital expenditures, have brought Intel closer to positive free cash flow. In the last quarter, the negative free cash flow gap shrank to $2.5 billion from $4.3 billion a year earlier, signaling progress but not yet a full turnaround.
Despite these improvements, Intel's trailing 12-month revenue of $54 billion remains well below its $80 billion peak in 2020-2022, and operating profit margins are still recovering from historic highs.
The company's future profitability hinges on increasing sales and better utilization of its manufacturing capacity, which would allow for significant margin expansion due to high fixed costs. Nevertheless, the current stock price already reflects high expectations, trading at a forward price-to-earnings ratio of 103 and a market price more than double the analyst's calculated fair value. Given these factors, the recommendation is to wait for the upcoming earnings release before considering a purchase, as much of the anticipated growth is already priced in and the risk of downside outweighs the potential for further upside unless Intel delivers exceptional results or secures major new customers.
LINKS
- Channel membership sign-up page with exclusive perks.
- Special offer for The Motley Fool Stock Advisor.
- Link to Parkev Tatevosian's investing framework book.
- Discounted access to Fiscal.ai for investment research.
- Webull sign-up page with bonus shares offer.
- Free monthly newsletter subscription on Substack.