Intel Stock Drops Despite Knockout Earnings. Spending Concerns Aren't Just for the Hyperscalers. -- Barrons.com

By Angela Palumbo and Jack Denton

Intel's strong earnings weren't enough to keep the stock's gains going on Friday.

Shares slid 3.1% to $97.13 during regular trading on Friday, after jumping as much as 13% after-hours Thursday night.

Late Thursday, Intel reported per-share earnings that were almost double what analysts had forecast for the second quarter, while revenue jumped ahead of estimates. Management cited continued strong demand for the company's chips as the need for the hardware that powers AI continues to boom.

But it seems concerns about high spending in the AI age are overshadowing those results. Intel management said on Thursday's earnings call that they were raising their 2026 capital expenditure estimates to more than $20 billion, up from around $18 billion, as the company works to meet the rising demand of its products.

Management added that they expect 2027 capital expenditures to be "significantly above the 2026 levels."

Those spending levels could force the chip maker to raise capital through an equity offering, Hendi Susanto, a portfolio manager at Gabelli Funds, told Barron's. Other tech giants like Alphabet have sold shares this year, too, as AI-related spending has burned through much of their cash stockpiles.

"The prospect of shareholder dilution and continued pressure on free cash flow are likely to weigh on investor sentiment and cap the stock's upside over the short to medium term," Susanto said.

Investors have been paying close attention to how much companies are spending to build out the infrastructure needed to meet growing AI demand. Alphabet stock dropped 7.1% on Thursday after the Google parent raised its capex estimates for the year. Investors seem to be worried about more than just hyperscaler spending, though. On July 16, fellow chip company Taiwan Semiconductor Manufacturing stock declined 2.3% after the company announced an additional $100 billion investment in the U.S.

Some analysts do see Intel's increased spending commitments as a positive sign, though.

"We view the aggressive Capex raise as a proof point that Intel is likely to see continued customer acquisition as the United States demands more domestic semiconductor manufacturing," said analysts at D.A. Davidson.

While D.A. Davidson reiterated its Neutral rating on Intel, it significantly hiked the price target to $100 from $77.

Melius Research analyst Ben Reitzes agrees.

"That increase...signals confidence in cash flow upside and demand visibility from long-term agreements for products," Reitzes wrote on Friday. He raised his price target on Intel to $165 from $150 while reiterating a Buy rating.

Intel is coming off a rough patch, with the shares closing Thursday at $100.23 on the back of a month that has seen the stock lose almost a quarter of its value. Another concern from some investors is that the current massive spending on AI hardware like Intel's chips is unsustainable.

The stock, tapped as one of Barron's picks for 2026 , remains up almost 160% this year. Shares are trading at 56.4 times earnings expected over the next 12-months, which is above their five-year average of 33 times forward earnings.

Write to Angela Palumbo at angela.palumbo@dowjones.com and Jack Denton at jack.denton@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 24, 2026 12:26 ET (16:26 GMT)