Intel stock soared nearly 40% in September. Is there room for growth?

Intel was in the center of attention in recent weeks on the background of sharp growth of quotations and publications about possible deals of the company with Apple and TSMC. An additional factor of support was reports about the US government's plans to increase pressure on chip manufacturers to make their domestic production volumes match import volumes.

During the trading week of September 22-26, Intel shares rose about 21%, and in September, the increase was about 39%. This week quotes are in the negative, but the drawdown may be partly due to the correction, suggests MarketWatch. Does Wall Street expect the rally to continue?

- The surge in Intel's share price over the past month has apparently been driven by high-profile announcements and media attention, points out Don Bilson of research firm Gordon Haskett, he is quoted by CNBC. "While we believe CEO Lip-Bu Tan is doing a lot of things right now, rather than just chasing headlines that could push the stock up, we wonder if he is turning Intel into a quasi-public company that exists to serve its new investors," he said. In August it became known that 10% in Intel will receive the U.S. government, in September about the investment of $5 billion announced Nvidia, in addition, sources Bloomberg and The Wall Street Journal said that the company wants to get investments Apple and TSMC. However, adds strategist Gordon Haskett, "even if Intel becomes a puppet in the hands of its masters, it is better than the game it played two months ago, when the stock was rudderless and traded at $20 per piece."

- Deutsche Bank analysts led by Ross Seymour see a mixed picture for Intel, MarketWatch reports . On the one hand, the company is taking active steps that "reflect CEO Lip-Bu Tan's aggressive drive to strengthen the balance sheet at all costs." Deutsche Bank praised this strategy as the chipmaker attracts investment in both its product line and manufacturing development. Analysts said the market has "clearly reacted positively" to this, with Intel shares trading at around 29 times forecast earnings per share for 2027. However, the "real financial impact" of Intel's latest moves won't become apparent until 2028 at the earliest, Deutsche Bank said. On Sunday, it raised the target price of the company's securities from $23 to $30, but retained a "hold" recommendation. The new target is lower than the current quotes.

- According to Simply Wall St's discounted cash flow model, the fair value of Intel stock is about $47.85, about a quarter above the current price. This indicates that despite the rapid growth, the stock still has upside potential. Admittedly, the model is based on ambitious projections: today, the company's free cash flow is negative, but analysts expect it to recover and reach nearly $15 billion by 2029. Much depends on how successfully Intel implements its strategy of rebuilding and expanding its production capacity, Simply Wall St. Another approach is valuation through the P/S multiple, i.e. the ratio of stock price to sales. Intel's current P/S multiple is 3.11, which is noticeably below both the industry average (4.7) and key competitors (averaging about 15.47). Simply Wall St estimates a fair value of 4.47.

In general, Wall Street's attitude to Intel shares remains cautious: 37 out of 45 analysts, who track the company's dimamiku, advise to keep its securities in the portfolio, and the number of such analysts has not changed for the month. Five recommend getting out of a stake in Intel, and only three suggest buying its shares (there were two such ratings a month ago). The average target price is $25, which implies a 25% drop.

This article was AI-translated and verified by a human editor