Chip stock Intel (INTC) faces its sticking point. The stock has recovered marvelously from earlier losses, mostly on the strength of surging investment and foundry hopes. But those foundry hopes are about to be sorely tested, as Intel struggles to land customers for both the 18A and 14A processes. Investors are starting to get concerned as well, with shares sliding down nearly 5.5% in Monday afternoon’s trading.
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The “multiyear journey” that CEO Lip-Bu Tan declared is starting to look like a bridge too far to some investors, and concerns are starting to mount. The 14A production node is set to emerge, but so far, no major customers have really lined up to take advantage of it, reports noted. The 18A process is putting out chips—the Panther Lake lineup—but reports still suggest that buyers are a bit thin on the ground. Recent reports even suggested that Intel was going to put most of its production capacity to work on the Xeon chip line for servers.
Some deals have already been made, but no one is quite sure just what kind deals these are. Things like “…scope and timing…” are unclear at best. And the bulk of Intel’s foundry revenue right now is, basically, Intel selling chips to itself. While Intel has landed substantial new investment and new hope to go with it, Intel needs to start making substantial sales wins, and do so at a time when its production yields are making its own products more scarce.
A Light in the Tunnel
There is one excellent potential deal in the making, assuming it actually comes to pass. Reports suggest that Apple (AAPL) is once again poised to come back to Intel to produce the M-series chip lineup. But this deal, if it comes to pass, would only be of limited help.
Reports suggest that the M-series chip would only start seeing production in numbers in 2027. That deal might expand to see iPhone chips made by 2028. But sales that are a year or two out do little good to a company looking for big sales wins right now.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on seven Buys, 19 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 122.13% rally in its share price over the past year, the average INTC price target of $48.04 per share implies 13.29% upside potential.
