Intel (NASDAQ:INTC) has staged a surprising comeback, echoing — at least superficially — the momentum-driven rallies that defined Nvidia’s (NASDAQ:NVDA) ascent in recent years. But after a powerful run, Intel’s latest earnings report delivered a sobering reminder that turnarounds are rarely linear. This raises a critical question for investors today: does it make sense to buy the dip in INTC stock, or is the recent sell-off a warning sign?
Intel’s Nvidia-Like Rally Hits Resistance
Intel entered 2026 with strong momentum. After surging roughly 84% in 2025, the stock added more than 22% year-to-date before its latest earnings release. That rally followed years of underperformance and declining relevance in a semiconductor market increasingly dominated by Nvidia’s AI leadership.
However, expectations were sky-high. When Intel reported its Q4 2025 results, the numbers were good — but not good enough to sustain such an aggressive valuation reset. The market reaction was swift, pushing INTC shares down by double digits in a single session.
Breaking Down Intel’s Q4 2025 Earnings
From a headline perspective, Intel’s Q4 results were mixed but not disastrous. Revenue came in at $13.7 billion, beating analyst expectations of $13.4 billion. Adjusted earnings per share reached $0.15, nearly double the $0.08 consensus estimate. On an adjusted basis, Intel clearly outperformed.
That said, losses widened on a GAAP basis. Intel posted a net loss of $591 million, compared to a $126 million loss in the prior-year quarter. While investors were willing to tolerate near-term losses during the rally, guidance became the real issue.
Weak Guidance Undercuts the Buy-the-Dip Case
Intel’s forward outlook rattled investors. Management guided for Q1 revenue between $11.7 billion and $12.7 billion, below the Street’s midpoint expectation of $12.5 billion. Even more concerning, Intel projected breakeven adjusted earnings, missing expectations of roughly $0.05 per share.
Management cited supply-related challenges, which it expects to ease in the second quarter. Still, after a 109% gain over the prior 52 weeks, the stock needed near-perfect execution. The absence of that perfection triggered a sharp reset and complicated the argument to buy the dip in INTC stock.
A Strengthened Balance Sheet Buys Time
One bright spot is Intel’s liquidity position. Thanks to strategic moves — including investments from Nvidia (NASDAQ:NVDA) and SoftBank (OTCMKTS:SFTBY), partial monetization of its Mobileye (NASDAQ:MBLY) stake, and the sale of its Altera stake to Silver Lake — Intel ended 2025 with $14.26 billion in cash and equivalents.
While these actions diluted shareholders by increasing the share count, they also provided Intel with critical financial flexibility. In a capital-intensive industry, that breathing room matters for long-term investors.
Intel’s Turnaround Strategy Is Taking Shape
Intel is no longer the undisputed king of semiconductors, but its turnaround efforts are gaining traction. A major pillar of that strategy is its foundry business, which aims to compete with leading contract manufacturers. While blockbuster customer announcements remain elusive, speculation continues that Apple (NASDAQ:AAPL) could become a future partner.
Another promising area is custom ASIC development. Intel’s ASIC business is already operating at a $1 billion annualized run rate, and management estimates a total addressable market of $100 billion. If Intel executes well, this segment could become a meaningful growth driver.
AI PCs, CPUs, and Panther Lake Momentum
At CES 2026, Intel unveiled its Panther Lake processors built on its advanced 18A process node. Market reception was positive, reinforcing confidence in Intel’s manufacturing roadmap. There is also growing recognition that CPUs — not just GPUs — play a crucial role in the AI ecosystem.
The rise of AI-powered PCs adds another tailwind. While Nvidia dominates data center AI, Intel’s CPU expertise positions it to benefit from broader AI adoption across consumer and enterprise devices.
Should Investors Buy the Dip in INTC Stock?
Valuation remains the biggest obstacle. INTC stock trades at an eye-popping forward price-to-earnings ratio above 280x and a PEG ratio north of 28x. While book value offers some comfort — with shares trading at roughly twice book — the stock already reflects significant optimism.
The Intel story is ultimately about execution and long-term earnings recovery. CEO Lip-Bu Tan acknowledged both the massive opportunity and the ongoing execution risks during the earnings call. That honesty is refreshing, but it also tempers near-term enthusiasm.
For now, I wouldn’t rush to buy the dip in INTC stock. While I don’t see a compelling reason to panic sell, much of the anticipated improvement appears priced in. Until Intel proves it can deliver consistent execution, patience may be the smarter play.
Featured Image: Freepik
