‘Hold Your Horses Ahead of Earnings,' Says Christopher Rolland About Intel Stock
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That's why all eyes will be on the fallen chip giant next Thursday (July 24), when it reports Q2 earnings, a key moment that could offer clues about whether Intel's turnaround efforts are starting to gain traction.
But for those hoping to see early signs of real progress, disappointment may be in store. Assessing Intel's situation, Susquehanna's Christopher Rolland, an analyst ranked amongst the top 2% of Wall Street stock experts, thinks that 'tariff-related PC pull-ins' likely extended into early Q2, before tapering off later in the quarter.
Still, there are some incremental positives. Average selling prices (ASPs) seem to be rising modestly quarter-over-quarter, helped by early gains in AI PC adoption. Lunar Lake laptops climbed 1.5% to around 2.2% share, Arrow Lake desktops also rose 1.5% to roughly 2.3%, and Meteor Lake laptops increased 1% to reach 12% share. Even so, demand remains skewed toward older process nodes – Intel 7 still accounts for about 55% of both laptop and desktop shipments. According to Rolland, this points to 'ongoing problem for capacity shortages at older nodes that may limit revenue upside.'
Meanwhile, competitive pressures continue to mount, especially in the PC market. Intel is losing ground in the notebook space, where AMD is gaining momentum at OEMs like Dell. Rolland expects Intel's Client Computing Group (CCG) to post a 5% quarter-over-quarter decline, in line with consensus. However, he cautions that demand pull-forward and persistent market share erosion could dampen performance in the second half, potentially leading to a softer-than-usual seasonal outlook.
Feedback from the server channel was somewhat more encouraging, but here, too, Intel is feeling the squeeze. AMD is taking share in critical segments, including China, enterprise customers like Dell, and U.S. hyperscalers. While Intel CPUs are still widely used in AI systems such as Nvidia's DGX, Rolland remains cautious about the shift toward Nvidia's Grace architecture and the upcoming GB200 platform.
In Foundry, CEO Lip-Bu Tan might be redirecting efforts from the 18A node toward 14A, amid reports that 18A could be dropped for external customers. For Q2, the Foundry guide was lowered due to reduced wafer volume and ongoing 7nm capacity constraints.
Rolland expects Q2 gross margins to be roughly in line with the lowered guide (down 270 basis points sequentially) as Lunar Lake and Arrow Lake ramp up, both relying on costly TSMC tiles. Looking ahead, the road to margin recovery remains bumpy. Server-side pressures, soft AI PC adoption, high production costs, and the fact that Panther Lake isn't expected to scale meaningfully until 2026 all pose ongoing challenges.
Finally, Rolland continues to hear of layoffs at Intel, which could point to operating expense reductions beyond the $17 billion already targeted for the year – a 'favorable sign.'
'In short,' Rolland summed up, 'we expect Intel to post generally in-line results, but weaker guidance for 3Q/2H as tariff-related PC pull-ins in 1Q begin to fade, GB200/Grace ramps, and AMD continues to win PC/Server share.'
Bottom line, ahead of the print, Rolland rates INTC shares a Neutral, while his $22 price target suggests the stock will stay range-bound for the foreseeable future. (To watch Rolland's track record, click here)
According to TipRanks database, the INTC fence indeed appears the place to be right now; the stock claims a Hold (i.e., Neutral) consensus view, based on a mix of 26 Holds, 4 Sells and just a single Buy. Going by the $21.60 average price target, the shares will see a downside of ~5% over the coming months. (See INTC stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
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