Why We’re Cautious on This AI-Fueled Tech Stock

On the July 27, 2026, episode of The Morning Filter podcast, hosts Susan Dziubinski and Morningstar Chief US Market Strategist Dave Sekera discussed Intel’s INTC latest earnings report. Here is an excerpt from the show.

What Intel’s Earnings Reveal About the AI Buildout Boom

Susan Dziubinski: Let’s talk Intel. Intel reported earnings. The stock fell nearly 8%. Morningstar raised its fair value estimate on the stock, though, by $15 to $103 per share. Unpack those results, Dave.

Dave Sekera: When you look at the results, they posted a very strong quarter, but it’s all based on the AI buildout boom—huge, just tremendous demand increase for CPUs, which are used to manage AI workloads. So, with all of these data centers being built out, I think people underestimated the need for those CPUs, which are kind of the workhorse for managing those AI workloads. Revenue was up 25% year over year. Gross margin came in at 42%, that’s two points higher. And they then boosted their guidance for third-quarter revenue to 19%, which was above consensus.

To put this all in perspective, when we look at the server CPU market, it looks like it’s now expected to grow here in the short term at a 50% compound annual growth rate, such that it’ll end up being 4 times higher than what a lot of previous forecasts were, even as recently as last November. So, the fair value increase was a combination of a couple of things. I mean, really just incorporating these higher short-term results, making a couple of increases to our longer-term assumptions. Our team also noted the company made some progress on their manufacturing, seeing better yields in their latest 18A process. And then their 14A process is supposedly on pace for high-volume production later in 2028. So, as you noted, that all impacted our fair value.

I would say this is one where I think you have to be very cautious. There are a number of different CPU competitors out there, and to some degree, we’re just in that part of a cycle where a rising tide is lifting all boats. But this is one where I’m very cautious with all of these technology companies, that the hardware that they’re selling is, in my mind, very commodity-oriented. They’re not the leaders in technology for AI. So, if we get any kind of hiccup in the story, any kind of guidance pullbacks, these are the ones that I would not be surprised to see gap to the downside.

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