Intel has finally gottenup off the mat, to the consternation of Wall Street. Analysts still haven’t bought in, comparing the chip maker to other chip stocks. That isn’t the right comp, though.
Intel is more like Boeing than the companies it is chasing, such as Nvidia or Taiwan Semiconductor Manufacturing Co.
To be sure, commercial aerospace and nanoscale chip manufacturing are very different industries. Both Intel and Boeing, however, are turnaround stories. Which is why investors are better off comparing them to each other than to their peers in their industries.
For starters, there is the price-to-earnings ratio. Wall Street seems worried about Intel’s P/E radio of 94 times earnings expected over the coming 12 months, which dwarfs the 28 P/E of the iShares Semiconductor ETF.
It’s one reason that only 33% of analysts covering the company rate shares Buy. The average Buy rating ratio for S&P 500 stocks is closer to 55%. The average analystprice targetfor Intel stock is $93 a share, more than $20 below recent levels.
Boeing, however, trades at 160 times, while its peer Airbus trades at about 22 times.
Those sky-high P/E ratios would be a problem if Boeing’s or Intel’s earnings or free cash flow were normal. They aren’t. Boeing earned net income of more than $10 billion in 2018 and generated free cash flow of almost $14 billion. Net income and free cash flow for 2026 are expected to be $300 million and $2 billion, respectively.
Investors don’t value Boeing based on 2026 free cash flow. They are focused on 2028, when free cash flow is expected to top $10 billion again. Boeing stock trades at about 19 times the estimated 2028 free cash flow. Airbus trades for about 15 times.
Key to Boeing’s turnaround is building more planes. The company has an ample backlog of roughly 6,800 unfilled orders, but needs to deliver more than 800 per year to achieve substantially higher free cash flow. Boeing delivered 806 planes in 2018 and 600 planes in 2025.
Investors know all this, which is why Boeing stock doesn’t trade with the rest of the group. GE Aerospace shares are down roughly 15% from pre-Iran war highs, but up 30% over the past year. Boeing stock is up about 2% since the war began and up 13% over the past 12 months.
Intel shares won’t automatically trade with semiconductor shares for a while. How then should investors value them? Some sort of normalized earnings and free cash flow metric makes sense, but there isn’t a clean comparison such as Airbus for Boeing.
Intel earned a recent high of roughly $22 billion in net income in 2020, generating a similar amount of free cash flow. Net income in 2026 is expected to be about $5 billion, and free cash flow isn’t expected to be positive until 2028.
That’s no help for valuation. But semiconductor “foundries trade based on book value,” says Melius analyst Ben Reitzes, who was early in sussing out Intel’s comeback.
TSMC trades at more than 12 times book value, according to FactSet. Intel trades for about 5 times. That makes Intel look more attractive, but multiples of book value are influenced by asset profitability and other factors.
Still, if Intel’s semiconductor fabrication division, which now loses money, were as profitable as TSMC’s, it would be worth roughly $1.2 trillion when all of Intel’s fab capacity is up and running. There are some massive ifs. The capacity won’t be online fully until 2031, and Intel has to prove it can make chips as successfully as TSMC over that time frame.
That’s the goal, though. And outside the fab business, Intel has a chip business that’s a little larger than AMD, which has a market value north of $700 billion.
To be sure, that is some fun with numbers. But the exercise shows why investors shouldn’t get hung up too much on near-term valuations. It also shows what investors should be focused on. At Boeing, the issue is plane production. At Intel, margins and growth in the fab division are paramount.
Of course, both companies have to navigate macroeconomic and industry headwinds, but if management teams led by Lip-Bu Tan at Intel and Kelly Ortberg at Boeing stay focused on what matters, both stocks should be fine no matter what happens.
