Has Intel’s Big 2024 Rally Gone Too Far After Recent Turnaround Momentum?

• Wondering if Intel at around $37.81 is still a smart buy after its big run, or if the easy money has already been made? Let us cut through the noise and focus on what the numbers actually say about value.
• Despite dropping 8.7% over the last week and slipping 0.2% over the past month, Intel is still up an impressive 87.0% year to date and 85.9% over the last year, while its 3 year gain of 45.7% contrasts with a 5 year decline of 11.9%.
• Much of this volatility has been driven by shifting sentiment around Intel's turnaround story, including renewed attention on its manufacturing roadmap and ambitions to become a leading foundry player for other chip designers. Investors have also been reacting to broader semiconductor headlines, from AI demand to geopolitical supply chain risks, which tend to amplify moves in established chip names like Intel.
• On our framework Intel scores a 3 out of 6 valuation checks, suggesting the stock looks undervalued on some metrics but not all. Next we will walk through the main valuation approaches, then finish with a more holistic way to think about what Intel might really be worth.

Intel delivered 85.9% returns over the last year. See how this stacks up to the rest of the Semiconductor industry.

Approach 1: Intel Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth today by projecting its future cash flows and discounting them back to the present. For Intel, this 2 stage Free Cash Flow to Equity model starts from its last twelve months Free Cash Flow of roughly -$13.7 billion, reflecting heavy investment and near term pressure on cash generation.

Analyst and extrapolated forecasts then map a recovery path, with Free Cash Flow expected to turn positive and gradually grow to about $10.95 billion by 2035. These projections combine a handful of analyst estimates over the next few years with Simply Wall St growth assumptions further out, all expressed in $. When those future cash flows are discounted back to today, the model produces an estimated intrinsic value of about $15.48 per share.

Compared with Intel’s recent share price around $37.81, the DCF suggests the stock is roughly 144.2% above its calculated fair value, which would indicate meaningful downside if these cash flow assumptions prove accurate.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Intel may be overvalued by 144.2%. Discover 907 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Intel.

Approach 2: Intel Price vs Sales

For companies like Intel that are going through a heavy investment phase and have volatile earnings, the Price to Sales ratio is often a cleaner way to judge value because revenue tends to be more stable than profit in the short term. What counts as a reasonable multiple still depends on how quickly investors expect that revenue to grow and how risky the turnaround looks, with faster growth and lower risk justifying a higher Price to Sales ratio.

Intel currently trades on a Price to Sales multiple of about 3.37x, which is well below both the Semiconductor industry average of roughly 5.41x and the broader peer group at around 14.40x. Simply Wall St’s Fair Ratio framework goes a step further by estimating what Intel’s Price to Sales multiple should be, given its specific growth outlook, margins, industry position, size and risk profile. On that basis, Intel’s Fair Ratio is 5.43x, suggesting the market is assigning a discount relative to what these fundamentals would typically support.

With Intel’s actual Price to Sales multiple sitting meaningfully below its Fair Ratio, the stock appears undervalued on this metric.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1448 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Intel Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect the story you believe about Intel with the numbers behind its future.

A Narrative is your structured perspective on a company, where you spell out how you think revenue, earnings and margins will evolve and what fair value that implies, instead of just accepting a single target price.

On Simply Wall St, Narratives live in the Community page and act as an easy tool that links Intel’s business story to a quantified forecast and then to a fair value, so you can quickly see whether your view says the stock is above or below where it should trade.

Because Fair Value from each Narrative is shown next to the latest share price and is updated dynamically when new news or earnings arrive, Narratives can help you decide how to manage your position based on how reality is tracking against your expectations.

For Intel, one Narrative might interpret fair value as being in the high 20s based on a constructive view of AI and foundry execution, while another might land closer to the mid teens if you are more cautious about execution and macro risks.

Do you think there's more to the story for Intel? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com