Harsh Chauhan, The Motley Fool Thu, November 12, 2026 at 12:53 PM EST 5 min read INTC -0.88% NVDA -5.06% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Shares of Intel (NASDAQ:INTC) delivered incredible gains to investors in the first half of 2026, but have seen significant volatility in recent months.
As it turns out, Intel stock has retreated 51% since the beginning of July. The past few days have been even more brutal for Intel investors, with the stock plunging big time following the release of its third-quarter results on Oct. 29. However, Intel's pullback could be an opportunity for savvy investors to buy a top semiconductor stock at an attractive valuation, especially given its solid upside potential.
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Let's take a closer look at Intel's prospects and valuation to check how much upside it could deliver over the coming year.
When Intel released its Q3 results, the company reported a solid 21% increase in revenue from the year-ago period to $16.5 billion. The company's non-GAAP earnings per share (EPS) jumped by an incredible 126% from the year-ago period to $0.52.
Intel delivered such impressive growth despite a 5% decline in revenue from its client computing and physical artificial intelligence (AI) business segment. It is worth noting that this business is a key source of revenue for Intel, accounting for nearly half its top line in Q3. The ongoing weakness in the PC market, along with Intel's market share losses to Advanced Micro Devices, explains why Chipzilla's sales in this segment dropped last quarter.
The bad news for Intel investors is that the PC market's decline is here to stay. Counterpoint Research notes that PC sales dropped by 21% last quarter, and the Q4 decline is likely to be steeper at 27%. Higher costs of memory and other components are taking a toll on this market. The positive news is that Intel expects the PC decline to ease in 2027, with unit shipments predicted to drop by 10%.
However, the biggest takeaway from Intel's quarterly report is the impressive growth in the company's data center business. Its data center and AI revenue increased by an incredible 78% from the year-ago period to $7.3 billion, helping lift the company's top and bottom lines. Looking ahead, Intel expects the data center business to sustain its solid momentum in 2027, driven primarily by the healthy demand for server central processing units (CPUs).
Intel noted on the latest earnings call that its Granite Rapids server CPUs have "become one of the fastest ramping server products." Meanwhile, the company is already witnessing strong demand for its first Intel 18A server CPU codenamed Clearwater Forest, which will start shipping next year. Overall, Intel's server CPU business seems poised for healthy growth in 2027, driven by partnerships with major AI infrastructure players such as Oracle.
Intel points out that the total addressable market (TAM) for server CPUs could increase from the current $40 billion to more than $200 billion over the next five years, as these chips are used to handle agentic AI and inference workloads. As such, I won't be surprised to see Intel's DCAI business sustain solid growth in 2027 and beyond, boosting the company's overall growth as it starts accounting for a larger share of its business.
Intel trades at 37 times forward earnings, which is quite attractive for a company that delivered triple-digit earnings growth last quarter. What's more, even though Intel's Q4 guidance turned out to be weaker than expected, investors will do well to note that the company will still deliver respectable earnings growth.
Intel's Q4 non-GAAP EPS guidance of $0.25 is significantly lower than the consensus estimate of $0.43, but it implies a 66% increase from the year-ago period. For the full year, analysts are expecting Intel's EPS to increase by a whopping 254% to $1.49. Analysts expect Intel's EPS growth to slow down to 20% in 2027, but that may not be the case due to potential price hikes in server CPUs.
As a result, Intel could step on the gas over the coming year. Even Wall Street is bullish about the stock's trajectory, with Intel's 12-month median price target of $88 implying 41% upside. This AI stock could indeed deliver solid gains by outpacing Wall Street's growth expectations, thereby encouraging the market to reward it with a premium valuation.
After all, Intel trades in line with the iShares Semiconductor ETF, an exchange-traded fund that tracks the semiconductor industry and has a price-to-earnings ratio of 37. So, it seems like a good idea to accumulate Intel while it remains beaten down, as its improving data center prospects could supercharge the stock in 2027.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Oracle, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.
Prediction: This Will Be Intel's Stock Price After 1 Year (Hint: It Implies a Nice Jump) was originally published by The Motley Fool
