By Adam Levine and Adam Clark
Intel stock has been on a tear, up 235% in the past year after a multiyear slide. As the company reports its first-quarter earnings Thursday afternoon, investors will be looking beyond this year to see if the company can find the elusive outside customers it needs for its manufacturing -- and Elon Musk's Tesla looks to be the first taker.
Wall Street analysts polled by FactSet expect first-quarter adjusted earnings-per-share of 2 cents, down from 13 cents last year. Sales are projected to decline by 2% from last year to $12.4 billion.
Intel stock has been on a long journey. The company had manufacturing technology problems for years, which led to a change in direction in 2021 under new CEO Pat Gelsinger. For the first time, the company would try to contract out its manufacturing like the leader in that business, Taiwan Semiconductor Manufacturing. From the stock's 2020 peak at $69.29, it fell to $17.67 a year ago. As late as last August, the price was $18.97.
But a new deal-making CEO, Lip-Bu Tan, has shaken up the narrative. First, he sold a 9% share of the company to the U.S. government, earning the favor of President Donald Trump. Then he formed a loose partnership with Nvidia, the AI-chip leader, that included a 4.5% stake in Intel for Nvidia.
The narrative was boosted in the past month by Intel buying back a portion of a factory it had previously sold to Apollo Global Management, as well as a new deal with Elon Musk's companies to build a massive factory complex in Texas.
Intel stock reached a new high of $70.33 last week, despite a near-term outlook that is tepid. As a result, the stock is trading at 92 times its projected earnings-per-share for the next 12 months, a record for the company. The broad S&P 500 index trades at around a 21 multiple to earnings.
Intel's major issue continues to be that its manufacturing technology lags Taiwan Semi, and that it has made it difficult to sign up external clients. Outside customers are key, because Tan has said that the next step in Intel's manufacturing technology will be too expensive to build without external income.
However, things are looking up. Tesla CEO Musk told analysts on Wednesday that he expects to use Intel's 14A manufacturing technology at the TeraFab manufacturing facility which will serve the electric-vehicle maker as well as SpaceX.
"We plan to use Intel's 14A process, which is state-of-the-art, and in fact not yet totally complete," Musk said. "But given that by the time TeraFab scales up, 14A will be probably [be] fairly mature or ready for primetime. 14A seems like the right move."
Intel shares were up 1.4% at $66.20 in premarket trading Thursday.
Still, 14A isn't expected to launch until 2028. Currently, the Intel foundry segment only has a single, internal customer, and analysts project it will show a $2.4 billion first-quarter operating loss.
The internal customer is primarily a seller of PC chips, which analysts expect to make up 57% of first-quarter Intel sales. The PC business is being badly impacted by a global memory shortage that is driving up prices, and analysts see first-quarter sales to this end market slipping by 7% from the year before.
Intel's final problem is that it has missed out on much of the revenue generated by trillions of dollars being invested into AI data centers. The primary beneficiary has been Nvidia. In a two-way data center revenue race between the companies, Intel held a 71% share in 2021, which dwindled to 7% last year.
So the narrative around Intel is not about this year or even next year, but whether it can bring in outside customers to turn its foundry operating loss into a profit. Support from the White House, Musk, and Nvidia could help.
Write to Adam Levine at adam.levine@barrons.com and Adam Clark at adam.clark@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 23, 2026 07:43 ET (11:43 GMT)
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