Intel (INTC) has been one the big story stocks of the past year, but sentiment is starting to sour and investors should be wary. Up 19% so far in 2026, the share price has gained 70% over the last 12 months. To put that into context, the ‘Sox’ is up 13.5% and 60% over the same timeframes.
But sentiment is fragile. In February, Intel has largely traded lower. This is a stock priced for perfection of a recovery that may not work out.
Years in decline
Since 2020, overall revenue and operating margins have fallen sharply. Five years ago, Intel reported fiscal 2020 revenue of $77.9 billion and margins of 30%+. Last year (2025), equivalent figures were $52.9 billion and 5.9%.
| Intel (INTC) | Price: $46.79 | Market cap: $233.72bn |
Free cash flow per share has gone from $4.95 to -1.09.
Perhaps Intel’s biggest challenge has been an inability to meaningfully tap into the AI infrastructure boom, largely because AI models are built using GPUs (graphics processing units) – dominated by Nvidia (NVDA), not the CPUs (central processing units) where Intel had leadership. These are mainly used to power desktop computers.
Another big issue is that its CPU dominance has come under threat from semi peer Advanced Micro Devices (AMD), which continues to eat away market share.
Market share erosion
AMD finished 2025 with one of its strongest quarters ever, partly because Intel struggled to get enough client silicon from its own fabs and from TSMC (TSM). The gap between AMD’s and Intel’s desktop CPU market shares is still around 27%, meaning that Intel maintains its undisputable lead, but the pace at which AMD is shrinking it looks quite formidable.
Intel, which missed forecasts in Q4, admits that it is hard to compete against AMD with its current chipset line-up and hopes that things will begin to change in late 2026-2027 with new chipsets. Reversing market share losses to AMD is one of Intel’s new CEO Lip-Bu Tan’s key objectives, having taken in March 2025 to lead a major, AI-focused turnaround.
The former CEO of Cadence Design Systems (CDNS) – 2009–2021 – also has a remit to slash costs, restructure the foundry business, and accelerate the 18A manufacturing process, a cutting-edge, 2-nanometer class semiconductor manufacturing process scheduled for high-volume production in late 2025.
That’s a lot to do, and a huge challenge for an organisation of Intel’s scale. This means that AMD will likely continue to enjoy eating Intel’s lunch in the coming quarters.
Investors have massively backed the Intel recovery story over the past year, but this has cranked up the pressure, and the PE to unsustainable levels. Intel’s rolling 12-month PE stands at 83, three-times that of AMD’s 29.
True, earnings are now coming from a low base, allowing rapid progress – analyst consensus projects 150% EPS growth this year, and 50% in 2027. But execution risk remains elevated and sentiment fragile, and investors should be wary.
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