Freedom Broker cuts Intel rating on valuation concerns

Freedom Broker downgraded Intel (NASDAQ:INTC) stock from "Buy" to "Hold" and cut its price target from $100 to $90, citing valuation concerns despite strong performance. The stock has risen 150% year-to-date but now trades above InvestingPro's fair value, with an EV/EBITDA multiple of 29x suggesting it may be overvalued at current levels. Intel's fiscal 2026 first-quarter results significantly beat market expectations across revenue, gross margin, and earnings per share. Analysts project a return to profitability this year with EPS of $1.52, a major recovery from last year's losses. Demand exceeds supply across all business units, with AI-related revenue accounting for about 60% of total revenue, up roughly 40% year-over-year. The data center and AI segment led growth, driven by multi-year CPU and ASIC deals with Google, an Nvidia DGX Rubin host CPU win, and collaboration with SambaNova. Intel reported Q3 revenue of $16.5 billion, up 21% year-over-year and about $200 million above the midpoint of guidance. However, Q4 revenue guidance of $15.5 billion fell below the consensus estimate of $17 billion, prompting Piper Sandler, Stifel, Northland, and Rosenblatt to lower price targets due to weak guidance and market challenges. Issues at Israeli manufacturing facilities, weak PC demand, and rising memory prices contributed to the disappointment. Despite this, adjusted EPS of $0.52 beat guidance by 37%, and adjusted gross margin of 44.1% exceeded guidance by 210 basis points.