Intel (INTC) shares had tumbled 12% by early trading on Friday, after the company’s latest financial results revealed a weaker-than-expected outlook for the quarter in progress and supply constraints continue to affect gross margins.
“The Q1 guidance certainly left a lot to be desired, and after Intel’s rapid rise in recent months, the stock is rather pricey,” said Seeking Alpha analyst APAC Investment News. “Ultimately, however, I believe technology execution is the most important factor for Intel’s future. The road ahead will be bumpy, but the ongoing chip shortages should make the environment more forgiving for now.”
Gross margins remain under pressure
Gross margins are expected to remain under pressure.
“Intel mentioned that it needs to improve yields across all nodes and does not expect gross margins to be above 40% any time soon,” said Citi analysts in an investor note. “However, the company expects higher pricing for server CPUs.”
Citi retained its Neutral rating on Intel but nudged down its price target to $48 from $50.
“The stock was clearly anticipating substantially more with Intel trading at close to 50X 2027 consensus EPS estimates prior to its report,” said Wedbush analysts in an investor report. “And while rolling out 18A/Panther Lake is clearly a positive step (following a number of problematic and skipped product/node launches), it is still very difficult (we’d argue nearly impossible) to properly understand and model the expected longer-term benefit (enough to shift INTC’s EPS/margin trajectory).”
Wedbush reiterated its Neutral rating and $30 price target on Intel.
“We still aren’t comfortable taking a more negative stance on INTC given the volatility in newsflow and the significant positive effect recent news items have had on the stock,” the firm added. “At the same time, we struggle to support current valuations, given the seemingly long road ahead to building earnings power that ostensibly supports the company at valuations north of our $30 PT.”
Meanwhile, RBC Capital Markets is waiting for Intel to announce customer announcements related to its 14A process.
“Management highlighted active engagements in 14A and expects customers to make decisions in 2H26, suggesting that a potential customer announcement is likely in 2H,” said RBC analysts Srini Pajjuri and Grant Li in an investor note. “However, material revenue contribution could take until late 2028.”
RBC maintained its Sector Perform rating and reduced its price target to $48 from $50.
Despite the issues, Intel expects its server CPU supply constraints to improve by the second half of the year.
“1Q26 GM of 34.5% also missed our estimate and consensus of 37.0% and 36.1%, respectively, due to product mix and 18A ramp,” said HSBC analysts Frank Lee and Pulkit Aggarwal in an investor note. “However, Intel highlighted that the 1Q26 miss was due to capacity shortages, given stronger-than-expected server CPU demand, and that it expects the server CPU supply constraint to continue to improve from late 1Q26 and throughout 2026.”
HSBC maintained its Hold rating and $50 price target.
Intel struggles to catch up to AMD
UBS analysts pointed out that Intel is still struggling to make gains on AMD (AMD), one of its primary competitors.
“Supply will improve from here, but the structural disadvantages of Intel’s roadmap versus AMD are still worsening, so INTC risks missing a lot of the server market’s AI-related upside,” said UBS analysts, led by Timothy Arcuri, in a note. “This all reads very positively for AMD. The roadmap in PC is definitely better, but this does not help much because the PC market is likely to be down this year—potentially quite a bit—as high memory prices destroy some PC demand.”
UBS reiterated its Neutral rating and nudged up its price target to $52 from $49.
Similarly, Morgan Stanley also highlighted Intel’s competitive disadvantage to AMD. The financial firm maintained its Equal-weight rating and nudged up its price target to $41 from $38.
“With no revenue growth in 2H25, AMD captured all of the unit growth, which surprised them—our sense has been that AMD’s tight supply-demand situation on server CPUs has more to do with demand upside than any real constraints,” said Morgan Stanley analysts, led by Joseph Moore. “Looking forward, Intel should have better than seasonal supply growth beyond 1Q AMD should as well. While 3 nm wafers remain tight, we believe that AMD’s server products on 5 nm and even 7 nm likely outperform Granite Rapids and even potentially Diamond Rapids, given Intel’s concerns around the lack of symmetric multithreading multithreading—the best processors will still likely win.”
Finally, KeyBanc Capital Markets was the most positive on Intel, as it believes Intel can secure Apple (AAPL) as an 18A customer and has the potential to secure a major client with its upcoming 14A.
“INTC did not confirm AAPL as an IFS win but indicated customers are expected to make foundry decisions on 14A in 2H26,” said KeyBanc analysts John Vinh and Ryan Rosumny in a note.
KeyBanc reiterated its Overweight rating and increased its price target to $65 from $60.
AMD shares were up nearly 3% during early trading on Friday. Nvidia (NVDA) had edged up 1%, and TSMC (TSM) had increased 1.5%.