Intel's Racing Stripes and Red Ink: How a McLaren Deal and $3.7 Billion Loss Define the Rally's Next Move

Intel shares dip 3% after 86% monthly gain, balancing McLaren F1 partnership with $3.7B Q1 loss. Foundry revenue rises but analysts split on valuation.

Intel has been on a tear — a 195% gain since January and a blistering 86.98% advance in the past 30 days alone. But on Thursday, the stock skidded 3.23% to €99.36, roughly 10% below its 52-week high of €109.88. The pullback reflects a deeper tension: the chipmaker is simultaneously rolling out a flashy Formula 1 partnership with McLaren and absorbing a $3.728 billion first-quarter net loss.

That polarizing picture has left Wall Street split, with some analysts raising targets while others warn of buyer exhaustion. For Intel, the next leg of the rally hinges less on racing logos and more on whether its Foundry business can convert customer buzz into real revenue.

Back on Track at McLaren

Intel is returning to Formula 1 after roughly two decades, this time as the official computing partner of McLaren. The deal extends across the F1 team, its IndyCar outfit, and its esports squad. Starting at the Montreal Grand Prix this weekend, the McLaren cars will carry Intel branding.

The partnership goes beyond a sticker on the sidepod. Intel’s Xeon and Core Ultra processors will handle computational fluid dynamics, aerodynamic analysis, vehicle dynamics modeling, and real-time race strategy work. The link between McLaren’s Technology Centre in Woking and garages around the world will now run on Intel hardware. Neither company disclosed financial terms, but the alliance hands Intel a global showcase for its silicon.

The Numbers That Ground the Rally

While Intel’s share price has soared, its income statement tells a different story. The company posted a Q1 net loss of $3.728 billion, weighed down by a $4.07 billion restructuring charge. Free cash flow came in at negative $3.867 billion. On a GAAP basis, the expected price-to-earnings ratio stands at roughly 156 — a figure almost meaningless when the company is still bleeding red ink.

There are green shoots. Data Center and AI revenue grew 22% year over year, and Intel Foundry revenue rose 16%. CEO Lip-Bu Tan noted that the company beat its own revenue expectations for the sixth consecutive quarter. Cash and equivalents jumped 92.77% to $17.247 billion, giving Intel some cushion. For the current quarter, management guided for revenue between $13.8 billion and $14.8 billion and adjusted earnings per share of $0.20.

Still, those numbers aren't yet justifying the stock's meteoric valuation. The annualized volatility of over 93% underscores how sensitive the shares are to new signals. The relative strength index of 63 suggests the market isn't overbought, but the distance to the 200-day moving line — a staggering 162.56% — shows just how far the equity has run.

Analysts in Two Camps

The McLaren partnership has done little to unify the analyst community. Deutsche Bank’s Ross Seymore lifted his price target to $100 from $63, citing increasing customer traction in the Foundry business. He kept a “Hold” rating. Bank of America’s Vivek Arya also raised his target — to $96 — but stuck with a “Sell” recommendation.

Elsewhere on the Street, KeyBanc issued a warning about “buyer exhaustion” and questioned whether recent inflation data could slow data-center investment. KeyBanc itself rates Intel “Overweight” with a $110 target. Mizuho has a $124 target and a “Neutral” rating, while Cantor Fitzgerald is at $90 with a “Neutral” consensus from FactSet of $92.60.

Dan Niles of Niles Investment Management offers the most bullish take. He argues that Intel is still undervalued on an enterprise-value-to-sales basis, betting that “Agentic AI” — systems that execute complex, multi-step tasks — will require more than just GPUs, giving Intel’s CPUs a coordinating role.

The Foundry Credibility Test

Underlying the entire debate is Intel’s Foundry turnaround. Chief Financial Officer David Zinsner said the yields on the 18A process node are on track to meet mid-2026 targets. That timeline is critical because the Foundry strategy hinges on technical credibility. Meanwhile, Evercore noted that Intel’s share of the server CPU market slipped from 59% to 55% as AMD and ARM gained ground.

The McLaren deal gives Intel a high-profile platform to demonstrate its computing prowess. But the real test remains whether the Foundry can turn growing customer inquiries into binding orders and, eventually, GAAP profits. Until then, the stock’s breathtaking rally rests on expectations that are still far ahead of the bottom line.