Why Intel Stock May Drop Soon
Intel (INTC) has stumbled before. Its stock has plunged more than 30% within a span of less than 2 months on 3 occasions in recent years, wiping out billions in market value and erasing massive gains in a single correction. If history is any guide, INTC stock isn’t immune to sudden, sharp declines.
Specifically, we see these risks:
- Manufacturing Crisis and Supply Chain Failure
- Unprofitable Foundry Draining Cash
Risk 1: Manufacturing Crisis and Supply Chain Failure
- Details: Inability to meet demand for high-margin server and AI CPUs, Sustained pressure on gross margins and profitability
- Segment Affected: Data Center and AI (DCAI) and Client Computing Group (CCG)
- Potential Timeline: Next 2-3 Quarters
- Evidence: Supply constraints from 18A process yields hampering recovery; CPU shortages have worsened in recent weeks, extending delivery times to as long as six months
Risk 2: Unprofitable Foundry Draining Cash
- Details: Negative free cash flow despite government subsidies, EBITDA margins constrained by ongoing operational losses
- Segment Affected: Intel Foundry
- Potential Timeline: Immediate and Ongoing
- Evidence: Intel Foundry reported operating losses of approximately $10.3 billion for the fiscal year 2025. CEO acknowledged that manufacturing yields are ‘still below what I desire them to be.’
What Is The Worst That Could Happen?
Looking at Intel’s risk in tough markets shows clear vulnerability. It plunged about 74% in the Dot-Com crash, 55% during the Global Financial Crisis, and 62% in the inflation shock. Even smaller shocks like 2018 and Covid caused declines around 25% to 35%. That’s a significant downside.
But the stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read INTC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Is Risk Showing Up In Financials Yet?
- Revenue Growth: -0.5% LTM and -5.5% last 3-year average.
- Cash Generation: Nearly -9.4% free cash flow margin and -0.04% operating margin LTM.
- Valuation: Intel stock trades at a P/E multiple of -1183.5
| INTC | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Semiconductors | – |
| PE Ratio | -1183.5 | 24.3 |
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|
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| LTM* Revenue Growth | -0.5% | 6.8% |
| 3Y Average Annual Revenue Growth | -5.5% | 5.5% |
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| LTM* Operating Margin | -0.0% | 18.6% |
| 3Y Average Operating Margin | -3.0% | 18.1% |
| LTM* Free Cash Flow Margin | -9.4% | 14.2% |
*LTM: Last Twelve Months
If you want more details, read Buy or Sell INTC Stock.
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Footnotes
Manufacturing Crisis and Supply Chain Failure
[1] Intel Supply Chain Issues Hurt Q4 Revenue Growth – Design News