Investors are bailing on Intel (NASDAQ: INTC) this morning after the semiconductor giant posted market-beating Q4 earnings but disappointed on the guidance front.
According to the company’s management, its soft guidance is mostly related to demand outpacing supply. Simply put, on the earnings call, Intel essentially told investors that it doesn’t have enough of what customers want.
On the surface, this sure seems like a great problem to have. Still, a senior Bank of America analyst, Vivek Arya, recommends that investors part ways with INTC shares at current levels.
Despite the post-earnings decline, Intel stock remains up more than 15% year-to-date.
BofA’s dovish view on Intel stock is not based on guidance
Interestingly, Arya’s bearish view on INTC stock isn’t even tied to the company’s outlook. In fact, he agrees that seeing demand outpace supply is good news for Intel shareholders in the near-term.
But he still refrained from recommending investing in Intel on the post-earnings dip primarily due to valuation concerns.
“We see no reason to buy a stock trading at 90 times price earnings when the leader of the market, Nvidia, is trading at about 25 times only,” he told CNBC in an interview today.
According to him, Intel’s stretched valuation appears even more concerning given the company’s manufacturing business and its product pipeline “are just not keeping pace with where the industry is going.”
Arya favours trimming exposure to INTC because it isn’t particularly well-positioned to compete with Taiwan Semiconductor on manufacturing and with Nvidia or AMD on design – at least in the near-term.
Meanwhile, Intel doesn’t pay a dividend either to appear any more attractive as a long-term holding either.
Could INTC shares sink further from current levels?
According to Vivek Arya, Intel’s commitment to setting up chip manufacturing expertise in the US is admirable, but delivering on that promise will take another two-to-three-years.
But the stock has already “run up well ahead” of what the multinational can realistically deliver in 2026 – making up for a strong enough reason to consider unloading it at current levels, he added.
On Friday, the Bank of America analyst reiterated his “underperform” rating on INTC, with a $40 price target indicating potential for another 13% downside from here.
What’s also worth mentioning is that Intel shares are hovering just above their “20-day MA” at the time of writing. A decisive break below the $44 level may accelerate downward momentum in the near-term.
That’s partly why options traders are currently signalling a continued decline to about $38 in INTC over the next three months.
How Wall Street recommends playing Intel in 2026
Other Wall Street firms seem to agree with BofA’s dovish view on Intel stock as well.
According to Barchart, consensus rating on INTC shares sits at “hold” only, with the mean target of about $41 indicating potential downside of more than 10% from here.
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