Intel (NASDAQ:INTC) stock has eroded its shareholders’ wealth. Importantly, INTC stock has lost substantial value in 2022 (down about 41%) and has consistently underperformed the benchmark index in the last five years. Given its underperformance and ongoing demand weakness, investors should take caution before going long on INTC stock.
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Is INTC a Buy, Sell, or Hold?
Due to the ongoing challenges ad uncertainty, most analysts prefer to remain sidelined on INTC stock. It has a Hold consensus rating on TipRanks based on three Buy, 19 Hold, and eight Sell recommendations.
The graph below shows INTC stock’s performance relative to the SPDR S&P 500 ETF Trust (SPY), an ETF (Exchange Traded Fund) that aims to deliver returns similar to the S&P 500 Index (SPX) in the last five years. Learn more about SPY here.
Despite the correction, INTC stock trades at a forward Enterprise Value/EBIT multiple of 16.25x, marginally higher than the sector median. Moreover, it is also higher than the five-year average of 11x.
Intel’s valuation is unappealing. Further, weakness in the PC market, competitive headwinds, and economic uncertainty could continue to pressure INTC stock in the foreseeable future.
Mizuho Securities analyst Vijay Rakesh said Intel witnessed “increased challenges” in the server and PC segment, with “server CPU ramps delayed to 2023 and softening PC demand.”
Rakesh added that Intel gained “some share in PCs.” However, “in the key high-margin server/data center segment it continues to see market-share loss into 1H23.”
Rakesh recommends a Hold on INTC stock. His price target of $32, implying 9% upside potential.
Bottom Line
The softness in demand, market share losses, and competition will continue to limit the upside in Intel stock. Analysts’ average price target of $29.44 is roughly at par with its closing price on November 25.
In comparison, analysts see Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) stocks as better alternatives to INTC stock. NVDA sports a Strong Buy consensus rating on TipRanks, while AMD has a Moderate Buy consensus rating.
