Intel’s factories and servers are better, but $113 still needs near-perfect foundry success years early. A $80 target is 6.3 times next-year sales.
Key points
- $16.13 billion Q2 2026 revenue, up 25% year over year, with 40.4% GAAP gross margin.
- $12.5 billion noncash mark-to-market charge drove the GAAP net loss; operations were profitable.
- $113 implies about 46 times my FY27 EPS of $2.44, versus a 22-times cyclical chip multiple.
The call
The price requires Intel to earn foundry-leader economics by late 2027. At 5.29 billion shares after the August sale, $113 is about 9.5 times my $62.5 billion 2026 sales and 59 times my $9.8 billion 2026 operating profit.
I expect real product mix and yield gains, not that multiple. External foundry is still $0.3 billion a quarter. 14A volume is 2028. Capex rises above $20 billion. A 6.3-times 2027 sales multiple, or 33 times my $2.44 EPS, is $80.
GAAP operating income ($ billions)SEC XBRL through Q2 2026; FY26E and FY27E are the author's.
Valuation
| Item | Figure |
|---|
| FY26E revenue | $62.5 billion |
| FY27E revenue | $70 billion |
| FY27E operating profit | $14.5 billion |
| FY27E EPS (5.29B shares) | $2.44 |
| Multiple on FY27E EPS | 33 times |
| 12-month target | $80 a share |
A recovering x86 maker with heavy capex and tiny external foundry sales does not earn a 46-times forward earnings multiple. Downside to $80 is 29%; if 18A and servers beat, $100 is still below today’s print. That asymmetry is a strong sell.
Revenue ($ billions)SEC filings through Q2 2026; Q3-Q4 2026E and FY27E are the author's.
Risks
- Server units and 18A yields keep beating, so sales run above $75 billion in 2027.
- A large external 14A wafer deal is signed with deposits that fill the 2028 plants.
- Memory and PC prices collapse and Intel still takes share, lifting mix more than I model.
What would change my mind
A 2027 foundry customer backlog above $8 billion of committed external wafers with cancellation fees.