Intel stock: Is it still too early to underwrite a full turnaround?

Investing.com -- Wells Fargo remains cautious on Intel (NASDAQ: INTC) despite signs of progress, telling investors in a note Wednesday that “it’s still too early to underwrite a full turnaround.”

In a preview note ahead of Intel’s second-quarter results, analysts highlighted several ongoing challenges, including the recovery of gross margin (GM%) and competitive headwinds in the client and server segments, as well as uncertainties surrounding its foundry strategy.

The bank maintained its Equal Weight rating and $22 price target on the stock, noting that “our below Street 2026 EPS estimate reflects our conservative view of a GM% recovery.”

Wells Fargo currently forecasts $0.55 in non-GAAP EPS for 2026, below the consensus of $0.89, and sees sustainable margin improvement only beginning in 2026 and beyond.

On the technology front, the firm expects a “net-positive update on the yield progression of Intel 18A,” which is viewed as central to both Intel’s turnaround and its goal of achieving breakeven in its Foundry business by the end of 2027.

However, the timing for 18A-based Diamond Rapids Xeon CPUs remains unclear.

Wells Fargo said it is also watching for signs of server CPU share stabilization. “At this point, we see continued AMD (NASDAQ: AMD) share gains through 2H25 and into CY26,” analysts wrote, citing AMD’s 2nm Zen 6 EPYC platform.

Intel’s Panther Lake, the first 18A-based client CPU, is expected to launch by year-end, but a “volume ramp [is] a 1H26 story.”

With client computing still accounting for roughly 60% of Intel’s total revenue, Wells Fargo noted that AMD’s momentum and rising Arm competition make an improving competitive position difficult.

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