Intel Corporation (INTC)
Semiconductores
Intel returned to growth: the 2nd quarter of 2026 was its largest revenue increase in more than fifteen years (+25%) and the operating margin moved from -24.7% to 11.1%. The problem is not the business but the price: at $88 the stock is pricing in a recovery that has not yet happened, and even projecting margins well above current levels the estimated return is -10% annually. Overvalued.
- Price
- $87.71
- Intrinsic value (5y, base)
- $51
- Total annual return (5y)
- -10.3%
- Status (nominal)
- Overvalued
- Margin of safety
- No margin
The essentials
- The accounting result misleads in both directions: the $11.29bn net loss over the last twelve months is dominated by a non-cash charge of $15,415M ($1,796M in 2025 plus $13,619M in the first half of 2026) for the government's warrant shares, which grows precisely when the stock rises; and the $5.6bn gain from the sale of 51% of Altera is not operating either.
- The business inflected: Q2 2026 with revenue +25% year over year, GAAP operating margin of 11.1% versus -24.7% a year earlier, and data center +59%.
- Return on capital remains well below the 10% bar: last-twelve-months operating income normalized for restructuring is $3.98bn (NOPAT $3.54bn) on $108.4bn of invested capital, i.e. 3.3%.
- At $88 the price already pays for the full recovery: the base case's estimated return is -10% annually and the favorable scenario just about breaks even with today's trading price.
Intrinsic value — two valuation methods
By both methods, the value today (DCF $29 · Multiples $41) is below the market price ($88).
Pillars of the analysis
The verdict — today vs 5 years
Today — expensive, no margin of safety: at $88 trades ~113.9% above its value discounted to today (~$41); the expected return does not even reach the risk-free rate (4.5%).
At 5 years — Sobrevalorado: the expected total return is negative — the price already discounts a demanding scenario that, if not met, results in a loss.
The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$25.
Thesis
The business
The business genuinely inflected. The 2nd quarter of 2026 brought $16.1bn of revenue, 25% more than a year earlier and the largest growth in more than fifteen years, with gross margin 12.9 percentage points above the prior year and GAAP operating margin of 11.1% versus -24.7%. Data center grew 59% and internal manufacturing 31%, with Intel 18A already in high-volume production. What did not change is the quality of the return: on invested capital of $108.4bn, the last-twelve-months NOPAT normalized for restructuring yields just 3.3% on that capital, well below the 10% bar, and the company admits losing share in its core market.
The valuation
It is valued by sum of the parts on EV/NOPAT, with three pieces: the processor design and sales business, manufacturing, and the stakes in Mobileye and IMS, each with the multiple suited to its nature and a resulting blended 132× of reference toward the terminal year. The revenue path starts at the level guided by the company for Q3 2026 and decelerates to a mid-single digit; margins recover from the current floor to 17% operating at year five, above everything Intel showed since 2021 except the 2018-2020 cycle. Even so, the five-year value comes to $51 per share.
The margin of safety
No margin of safety: the price already discounts a demanding scenario. Against a trading price of $88, the estimated total return of the base case is -10% annually, well below the 4% floor that barely preserves nominal capital. The favorable scenario — an external customer for 14A, sustained compute demand and 23.5% operating margin at year five — just about breaks even with today's price: -10% annually. When the optimistic scenario is the one that returns the price paid, there is no margin of safety left to demand; the exercise stopped being about valuation and became about expectations.
What to watch
The disconfirmer is the Intel 14A node: if an anchor external customer appears, the economics of the segment with the most assets change and the manufacturing piece stops being a drag. The second signal is the persistence of the gross margin: the 2nd-quarter expansion came from better wafer yields and cycle times, not from price, and it remains to be seen whether it survives the normalization of client volume. The third is dilution already executed: in August 2026 Intel issued 242.1 million new shares at $95.00 (~$23,000M gross), taking the share count to roughly 5,346 million; the government's warrant for 241 million shares remains contingent on Intel relinquishing control of the foundry, and the company itself states it does not expect it to become exercisable.
Educational / informational. Does not constitute investment advice.