Intel shares (NASDAQ: INTC), the world’s largest semiconductor company, are down today after it posted strong Q4 results but disappointing guidance.
Management of the company believes that its soft forecast is mainly due to demand exceeding supply. Intel told its investors on their earnings call that they don’t have the products customers are looking for.
This seems to be a very big problem. Vivek Aryana, senior Bank of America Analyst, still recommends investors sell INTC at the current price.
Intel’s stock is still up over 15% for the year despite the decline in earnings.
BofA’s dovish outlook on Intel isn’t based on the guidance
Arya’s negative view of INTC is not even related to the outlook for the company. He agrees with the fact that Intel’s shareholders will benefit from a demand-supply imbalance in the short term.
He still did not recommend investing in Intel after the earnings dip, mainly due to concerns about valuation.
In an interview with CNBC today, he said: “We don’t see any reason to purchase a stock that trades at 90 times earnings, when Nvidia is the market leader, trading only at 25 times.”
Intel’s valuation is stretched, he says. The company’s product pipeline and manufacturing operations “just aren’t keeping up with the direction of the industry.”
Arya prefers to trim exposure to INTC as it’s not particularly well-positioned in terms of manufacturing to compete with Taiwan Semiconductor and to design to compete with Nvidia, AMD or Nvidia – least-wise for the short-term.
Intel also doesn’t offer a dividend to make it more appealing as a holding for the long term.
Can INTC share prices fall further?
Vivek Arya said that Intel’s dedication to establishing chip manufacturing in the US was admirable. However, it will still take two to three years to deliver on this promise.
The stock is “well ahead” of the amount the multi-national can deliver realistically in 2026, which makes it a good enough reason to unload at the current level.
The Bank of America analyst reiterated on Friday his “underperform rating” for INTC. With a price target of $40, this indicates that there is potential to see another 13% decline from the current level.
It’s worth noting that Intel is hovering at just above its “20-day MA”, as of the writing. If the price breaks below $44, the downward trend may be accelerated in the short-term.
This is partly the reason why traders of options are currently predicting a decline in INTC to $38 over the next 3 months.
What Wall Street thinks about Intel 2026
BofA is not alone in its dovish outlook on Intel.
Barchart’s consensus ratings on INTC are “hold”. The mean target is $41, which indicates a potential decline of over 10%.
The post BofA says there’s no reason to purchase Intel after the Q4 results: Find out more could be updated as new information becomes available.
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