Intel stock (NASDAQ: INTC) is trading at about $19 per share, its lowest point in over a decade. Could the stock rise by over 3x per share in the next few years? Does this sound a bit ridiculous? Consider this - Intel stock was trading at levels of about $60 per share just about three years ago. Although Intel has been plagued by multiple issues, including a tough PC market, market share losses to AMD in the PC and server space, significant manufacturing missteps, as well as the tech industry’s broader transition from CPUs to GPUs in the generative AI era, the company has several initiatives underway that could turn things around. In this analysis, we outline a possible scenario that could help drive Intel stock up to levels of around $60 per share. We consider three key metrics, namely revenues, net margins, and price-to-earnings multiple. See our counter scenario which explores how Intel Stock Could Dive To $10
Intel has been a volatile stock and the decrease in INTC stock over the last 3-plus year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 6% in 2021, -47% in 2022, and 95% in 2023. In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. But how could Intel possibly regain its footing and rise again? Let’s delve into the company’s revenue prospects to begin with.
Intel’s Revenues Could Pick Up Considerably
Intel’s sales have declined considerably of late. Intel revenues declined from $79 billion in 2021 to $54 billion in 2023 and revenues are expected to decline by about 3.5% this year. Intel revenues are projected at about $52 billion for 2024, per consensus estimates. If the company can turn the business around, driving revenues up by about 12% each year over the next two years, following the slight projected decline this year, revenues could grow to about $65 billion by 2026, or by roughly 1.23x between 2023 and 2026.
How can Intel do this?
Although Intel’s CPUs have been losing ground to rival AMD in the PC and server markets, the company’s pipeline of new chips looks promising. Intel’s new Lunar Lake chip designed for laptops and ultra-compact devices as well as its Arrow Lake chip for desktops, will be manufactured by TSMC using its advanced 3nm process. This could potentially put Intel ahead of AMD, which leverages TSMC’s older 4nm process node for its competing products. Intel’s latest server chips, such as the Sierra Forest and Granite Rapids, should also compete more favorably with AMD, using the new 3 nanometer “Intel 3” process node. The broader recovery of the PC market, coupled with stronger products, is likely to help Intel boost its revenue.
Intel is also doubling down on the AI processor space with its Gaudi 2 and upcoming Gaudi 3 AI accelerators. The systems are priced at about $65,000—about a third of Nvidia’s comparable offerings. Despite Nvidia’s lead, Intel is expanding its AI portfolio, including its Lunar Lake AI chip for PCs. Intel projects $4 billion in AI chip sales for 2024, with Gaudi 3 expected to contribute $500 million. If these new chips find favor with customers, Intel could boost its revenues further.
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