Intel (NASDAQ: INTC) has had a remarkable year in 2026, with its stock price surging by around 170%. However, a significant pullback in July has seen the stock retreat by about 30% from its all-time high. The question now is whether Intel deserves to be trading at these levels.
Investors who got in on Intel at the beginning of the year or even a year ago when the U.S. government announced its investment in the company are still sitting on substantial gains. The current dip in the stock may present an opportunity for some investors to buy the dip, while others may consider taking profits and looking for alternative investment options.
The recent signs of a turnaround for Intel are encouraging. The company has been facing challenges in both its processor and foundry businesses. The processor business, which is heavily influenced by consumer trends, saw a modest 9% increase in revenue year over year in its last quarter. On the other hand, the foundry business has been struggling to retain clients, with many opting for Taiwan Semiconductor Manufacturing instead.
However, Intel has been making efforts to revitalize its foundry business, with a focus on increasing domestic chip production. A recent deal with Apple to use Intel’s foundry for some chips is a step in the right direction. Despite these positive developments, the stock is currently trading at a high multiple of 88 times forward earnings, indicating that much of the turnaround may already be priced in.
Investors are hopeful that Intel can return to its performance levels from 2022 when it generated significant revenue and profits. If Intel can achieve those numbers again, the stock would trade at a more reasonable valuation of around 20 times earnings.
While the market has already priced in a full revival for Intel, there is still uncertainty surrounding the stock. This could lead to a potential sell-off if the company fails to meet expectations. As a result, some investors may find other AI investments more attractive and may choose to pass on Intel shares for now.
In conclusion, Intel’s recent performance and turnaround efforts have been impressive, but the stock may carry more risk than reward at its current valuation. Investors should carefully consider their options and weigh the potential benefits and drawbacks before deciding whether to invest in Intel or explore other opportunities in the market.
