Intel Stock Is At A Dangerous Turning Point (Buy Or Sell?)

Intel has just pulled off something that it has not been able to do in over 15 years and the stock instantly shot up more than 12%. And then well, it kind of fell apart. So, is Intel finally making one of the greatest comebacks in tech history or did everyone just get way too excited way too fast? Don't worry, we're going to break it down all in today's video. So, let's start with the actual earnings because on paper, they were genuinely fantastic. Intel, the company that makes the brains, the main chips inside most of the world's computers, reported its results for the spring quarter. And here's what they looked like. Revenue came in at 16.1 billion, up 25% from a year ago. That is Intel's fastest growth in more than 15 years. And it crushed what Wall Street expected by about $1.5 billion. Guys, that's a monster beat. Its adjusted profit was double what analysts originally predicted. And its gross margin, which is basically the profit on every single unit they sell before overhead and taxes, jumped from 28% a year ago to over 40% today. Guys, that is a monster improvement. And even better, Intel actually made real money running its business again, about $1.8 8 billion in operating profit after losing more than three billion in the very same quarter last year. It generated $7 billion in cash from operations. And it told investors that the current quarter should come in above expectations as well. For a company that had been left for dead as recently as one year ago, this was a real potential turnaround quarter. No wonder the stock instantly popped 12%. And when you look underneath the hood, the good news was broad. Its personal computer chip business grew 13%. Its data center and AI business grew a jawdropping 59%. Its combined products business, which is the chips it actually sells, earned nearly $5 billion in profit at a 32% margin. This was not one lucky number that made the quarter look good. Nearly every part of the company got stronger at the exact same time. that is shaping to look like a real turnaround. But wait, here's where it gets confusing and where you have to be a little diligent. Because if you looked at just one number, you'd think Intel completely imploded. On the official accounting, Intel reported an 11 billion loss. 11 billion, guys. So, how on earth can a company that makes over $2 billion running its business, but then also report an 11 billion loss? And here's the answer, and it really matters. As part of a deal with the US government, Intel has a big chunk of its own shares set aside in a special account. So, when Intel's stock price shot way up, the value of that obligation went up as well, and the accounting rules forced Intel to record a 12.5 billion paper loss on it. If you strip it out, Intel actually made money. This is exactly why we always look past the scary headline number and ask what the business really did. In fact, that ugly looking 11 billion number is probably part of what spooked some investors into hitting the sell button, even though the real cash generating business underneath was healthier than it had been in years. Now, for a wild part, the stock story, which honestly sounds made up, coming into summer, Intel was one of the hottest turnaround trades in the entire market. The stock had rocketed more than 250% in 2026, hitting an all-time high near $141 in June. Everyone suddenly wanted a piece. Then the famous on TV, Jim Kramer, got very, very excited about it. And at the end of June, with a stock near $128 and up about 278% of the year, he called Intel his single favorite stock and praised its CEO for turning the whole company around. And then a strange pattern started. Right after his praise, the stock began to slide. It dropped about 9% and by the middle of July, it had fallen another 8% all the way down towards $100 per share. Traders online started a joke about the inverse Kramer. The idea that whatever he loves, you should do the exact opposite. And then came the big one. Right after those blowout earnings I just walked you through. With the stock up over 12%, Kramer went on TV and declared that Intel was the one. What happened next? The stock completely erased that huge pop and turned negative, wiping out around $90 billion in market cap in less than one day. 90 billion gone. And on top of it all, Intel just finished five straight weeks in the red, something it hasn't done in over two years. Guys, Jim Kramer is a trader. He is not an investor. If you look, read his history talk. I've read both his books. He trades stocks. He does not invest in them. There is a big difference. And if you're new to the channel, you're going to learn this as time goes on. Trading and investing are totally different things. Now, let's start with the three biggest reasons to genuinely be excited about Intel. Bullcase number one, Intel is quietly becoming an AI winner, just not in the way you'd expect. Everyone knows Nvidia makes the fancy headline grabbing AI chips. But every single AI server also needs a regular brain chip, a CPU to run everything. And that is Intel's home turf. As AI grows, demand for those CPUs grows right along with it. In fact, Intel's data center and AI business grew 59% last quarter, and its profit there nearly quadrupled. Intel even said it couldn't make these chips fast enough to keep up with demand. This is a wonderful problem to have. And here's a twist that could make it even better. As AI gets smarter and starts doing tasks on its own, these so-called agents, it actually leans on those CPU brains even more, constantly calling up data and programs. So, Intel could quietly ride the entire AI wave without ever having to beat Nvidia at its own game. Bullcase number two, the profits are roaring back. And this is a big one, guys, because a year ago, Intel was losing money running its operations. This quarter, its main products business ran at a 32% profit margin. And the data centerpiece hit an incredible 40%. The whole company swung from losing money to a healthy 17% operating margin. And they pulled it off partly by cutting costs while sales grew, which is exactly a recipe that makes profits explode. This is the first real proof the turnaround is showing up in actual dollars and not just in press releases. Bullc case number three. Intel still owns the PC world. Even though it sold fewer chips last quarter, its PC revenue still grew because it raised prices by 27% selling fancier, more powerful AI PC processors. And Intel is deeply woven into nearly every computer maker and every big company's IT department on the planet. That kind of position doesn't just vanish overnight and it throws off a whole lot of cash. Now, before you get too excited, here are the three biggest reasons to be careful, and they are serious. Bare case number one, Intel's big factory for hire dream barely exists yet. A huge part of Intel's story is becoming a foundry, which is a company that builds chips for other companies. On paper, that business showed almost $6 billion in revenue. But here's the catch. Only about 290 million of that came from actual outside customers. Almost all the rest was just Intel's factory charging Intel's own divisions, basically moving money from one pocket to another. And that foundry still lost over $2 billion in a single quarter. Until big names like Apple or Nvidia actually commit to using it, this part of the dream is mostly a promise. Barecase number two, this turnaround is going to cost a fortune. Intel plans to spend over $20 billion this year building factories and even more next year. It's already carrying a fair amount of debt, and when asked directly, Intel's finance chief wouldn't rule out selling more shares to raise money, which would slice the company pie into more pieces and shrink what each existing share is worth. So, even if Intel successfully fixes its factories, all that spending and borrowing could swallow up the rewards, leaving regular shareholders with disappointing returns relative to the growth that Intel actually would get. It's a strange trap, but it's a very nuanced one that I want investors to understand. The company itself could win while the people who own the stock still lose because the value created gets eaten by debt, spending, and new shares. Barecase number three, Intel's still behind in the most profitable part of AI. The real gold mine in AI is those super powerful accelerator chips, and Nvidia flatout owns that market. Intel is mostly benefiting from the less glamorous CPU side. So, the danger is this. Investors get excited and start pricing Intel like it's a giant AI superstar. When in reality, it is still a supporting player fighting AMD on one side and Nvidia on the other. If today's price assumes Intel wins big in AI, that's a risky bet. Winning a slice of AI is a good thing, but being price as if you've already won the whole race is a dangerous one. Now guys, before we get into the analysis of Intel, I want to remind you, don't take our title and thumbnail too literally. We're never here to give you a stock tip. We're here to teach you the process so that one day you can sleep better at night because you know how to value a stock, make good assumptions about its future, and understand the price you're paying. So, which is it? A historic comeback or a stock that's gotten way ahead of itself? The business is clearly improving. That part is absolutely real. And it could be both of those. They're not mutually exclusive, but the stock has already run up more than 250% this year, which means an awful lot of good news may already be banked into the price. And the only way to know whether it's actually a good deal is to ignore the hype, ignore TV, and run the numbers ourselves. Because a stock can have a wonderful story and still be a terrible investment if you pay the wrong price. Now guys, I have very few Intel shares because I lost a lot of them on its runup through covered calls around $80 a share. But what's interesting is this guys, Intel has absolutely plummeted. It is at 8376 a share. Its all-time high was 142 guys three and a half weeks ago. That is a huge huge drop. Now the market cap is $430 billion. Enterprise value is about 500 billion. That $70 billion difference is essentially their debt. Remember, we were talking about debt there. Now, $70 billion of debt is fine if you make a ton of cash flow. They only made $2.83 billion in cash flow last year. Their 5-year average is actually negative. This is still a turnaround play. But let's say their cash flow was 20% of revenue. Their revenue is 57 billion. 20% of that is 11.4 billion. It's still a lot of debt. 70 billion on 11.4 billion in free cash flow is still a lot of debt. So the company has to get a lot better to be comfortable with this debt going forward. Guys, 10-year profit margin 11.6 5year is neg4. One year is negative - 20%. Again, this 11 billion net income loss is from their shares increasing in price. So just remember that going forward. Guys, a lot of garbage here. None of the numbers here are good. Look at the eight pillars, all X's. But remember, if the price is cheap enough, it can still make sense to own. You've got to remember that. So, all of these pillars here that we use, if you're new to the channel, I want you to remember these pillars are not a buy or sell decision. It's telling you a story that you have to ask questions about. So, for here, what are the questions? The questions are, is this gonna get better? And I'm being facitious about that, but you've got to remember that this is just ugly all around. This is a turnaround play. And a lot of times in a turnaround play, these numbers don't matter. Now, one interesting thing about Intel, if you go look at its stock chart and the maximum pay, the maximum chart, this was its peak in 2000. Intel was the Nvidia of 2000. You were dumb if you didn't own Intel, guys. It took 26 years to hit a new all-time high. Now, what's interesting is the business was much worse here than here. That's what's interesting. But along the way, the business was a lot better until about here. All of this was a better business than this. So, what caused that? Too much. People paid too much money for the stock here. the business had three or four times more revenue, four or five times more profit. And the same thing happened with Cisco. Cisco is even better example that I talk about on our channel a lot because the business today is significantly better than it was in 2000. And the stock again took 26 years to get an all-time high. Now guys, you heard me talk about a great story becomes a bad investment if you pay the wrong price. That is the fifth tenant of our five tenants of principal driven investing. If you're new to the channel, it's really important that you have these tenants in front of you because it's a good way to offer you guard rails as you're getting emotional because we all get emotional about investing. When I see headlines, I wonder, "Oh my gosh, am I wrong here? What's going on?" So, if you're interested, we have an absolutely free PDF that will give you all five tenants of our principal driven investing and explain them to you. Guys, it's a great place to start if you're serious about getting good at investing. So, click the link below and download the PDF in a matter of seconds. And I assure you, if you repeat this over and over, your mindset will change on investing. Now, we're going to go look at the um price to pay for the stock, but before we get there, let's go look at analyst estimates. And analysts are pretty optimistic about Intel. A dollar per share in profit this year growing to $4 in the next four years. That's a lot of growth, guys. But again, it's a lot of growth. If you assign a 20 PE to this $4 in profit, it makes it an $80 stock four years from now. It's currently 84 bucks. How do you make money on that? I'm not saying that's for sure going to happen, but this is the way to look at things. And look at their revenue growth from about $60 billion to 77 billion over the next four years. But a large chunk of that growth happens in the next two years. So there is a lot of optimism on Intel, but they still have a lot of issues to work through. And guys, this is exactly why we teach on YouTube. I want to sit there and tell people the most important thing is the price you pay relative to the value you're getting. Now, we're here. We have a story. We have some numbers. We can put them together in our stock analyzer tool to determine the right price to pay. But I want to remind you this does not include the balance sheet. And remember, the balance sheet in this company's got a lot of debt on it. So, I did a 10-year analysis. I did 5, 8, and 11% revenue growth for the next 10 years. This is mostly riding the wave of AI and the new chip sector and things like that going well. Next, I did profit margin and free cash flow. I did 8, 17, and 25. I want to keep note this 17 is actually lower than they were doing when just a few short years ago before their problems occurred. Next, what PE and price of free cash flow would I assign to this company 10 years from now? Well, guys, I went wide ranging. I went 13, 18, and 23. And the reason being is you want to start in your head at 15 or 16, which is the long-term average for for stocks in the S&P. You go higher for good companies, lower for bad companies. If they're able to hit these numbers, it's a pretty good company. So, I gave it a premium of 18 and 23. Finally, my 9% desired return. This is no margin of safety. This is not the price I want to pay. It's the price that I would sit there and say, "This is what the company's worth on the market." Now, I just shared with you how Intel swung from losing $3 billion to making almost two billion in one single year. I also shared how a 12% pop vanished in a matter of hours. And I showed you how running the numbers yourself is truly the only way for you to know if the story matches the price. But here's the thing, I can only show you so much in a YouTube video. Inside our community at everythingmoney.com, this is what we and all of our investors do every single day. We run the stock analyzer tool on real companies with real numbers and we figure out what price actually makes sense before we ever put a dollar at risk or spend a single minute on more research. And guys, I'm not just talking about Intel. Right now, our members are running thousands of stocks through the same exact process that you just watched me do. Tech, healthcare, industrials, you name it, they're doing it. And better yet, they're sharing their work. They're asking questions. They're answering questions. And they're getting better at this every single day. If you want proof that it works, one of our members named Kenan used the tools and the process that we teach to get into Meta at around $130 a share. Do you remember those days in late 22, early 23, guys? It is almost $600 a share right now. That is preparation meaning opportunity. Everyone was negative on Zuckerberg and Meta back then. And the people in our community were different. That's what this community is built for. So, if you're watching this intel breakdown and thinking, I want to be able to do this myself. Join everything.com right now. You can try everything for $7 for 7 days. The stock analyzer tool, the community, all of it for less than a cup of coffee at a shitty gas station in BF, Georgia. So, if you're serious about learning how to invest the right way, click the link below this video and get started right now. So guys, I hit the analyze button on my assumptions for Intel. Boom. Low price of 15, high price of 105, middle price of 50. Do you see how a year ago when the stock was 17 and I was buying it from the mid30s all the way down, it's a lot different situation when the stock is at 85 or 140. That's the difference. A different price changes your investment returns. Intel's a tough one. Turnaround plays are a tough one. But the thing I always bank on with Intel is they still have a good brand and a good reputation and that can help in the long run. Now, speaking of giant companies whose earnings sense shock waves through the market, if you want to see what really happened when Tesla and Google reported and why both of those stocks fell even harder than Intel, click our full breakdown right here on your screen. Thank you for your time.