Dear Reader,
Recently, President Trump unveiled his "AI Action Plan" and, like clockwork, tech stocks soared.
Nvidia, Microsoft, Amazon... they all celebrated.
But buried beneath the headlines is a massive WARNING signal to investors.
Here's what the mainstream media didn't report:
According to my calculations, Amazon, Microsoft, Google, and Meta will spend over $500 billion this year on AI research and data centers.
Their combined net income last year? Just $309 billion.
They're out way over their skis here!
All four are hemorrhaging cash in an AI arms race that may never live up to the hype.
Tesla might be the canary in the coalmine here.
The company just missed earnings badly. Elon Musk warned of "rough quarters ahead."
This is what I call a Pyrrhic victory – "winning" the AI race could turn all these hot tech names into losers.
The risks right now simply aren't worth it, as much as the founders of these companies want you to think they are.
So, what should you do?
Well, if you're interested in investing based on what front-page headlines are spoon feeding us, then by all means, stay in these overhyped names…
Me? I'm looking elsewhere, just as I always have.
Looking elsewhere is the reason I've notched more than 40+ stock picks so far whose prices have gone on to soar from 1,000% to 12,000%.
And this deeper search has today led me to 3 undervalued companies positioned to profit from the AI Action Planwithout the crushing spending burden.
I've also revealing 4 popular stocks I believe you should consider selling immediately – starting with Nvidia!
Yes, Nvidia!
You can get all 7 stock names and ticker symbols - completely free - in my brand-new special broadcast.
Click here to watch my new "Sell This, Buy That" broadcast now.
Sincerely,
Eric Fry
Senior Macro-Investment Analyst, InvestorPlace
P.S. When everyone's buying the same overvalued stocks, that's always your signal to blaze your own trail. Start by getting my contrarian picks here at no charge.
Intel's 21% Sell-Off Looks Ugly—But the Numbers Tell Another Story
Reported by Jeffrey Neal Johnson. Originally Published: 1/27/2026.
Key Takeaways
- Intel delivered fourth-quarter results that exceeded analyst expectations on both the top and bottom lines, despite manufacturing supply constraints.
- Strategic investments from industry leaders and a solid cash position provide the company with a financial safety net to execute its manufacturing roadmap.
- The current stock valuation suggests the market has priced in challenges that management expects to resolve as manufacturing yields improve later this year.
Investors detest uncertainty, and the stock market often punishes it severely. In the days following its fourth-quarter earnings report, Intel (NASDAQ: INTC) stock experienced a violent sell-off, dropping roughly 21% to trade in the low $40s. The decline was swift and brutal, erasing billions of dollars in market capitalization in less than a week as institutional and retail investors rushed to the exits. To a casual observer, the chart's red ink looks catastrophic — suggesting a company in deep distress and losing its competitive footing.
But a disciplined look at the financials shows a disconnect between Intel's stock price and its operational performance. While the market panicked over short-term forecasts, Intel delivered a solid quarter.
Silicon Valley Insiders are getting spooked about AI - here's why (Ad)
Almost no one sees it coming, but AI is about to split America into two over the next 12 months. On one hand, it'll make America's one-percenters richer and more powerful than ever. On the other hand, it's set to trap millions of hardworking Americans in financial quicksand. Former Google exec Kai-Fu Lee says AI could wipe out 50% of jobs by 2027. Elon Musk has said AI will surpass human intelligence by 2027. Mark Zuckerberg has said half of all coding could be done by AI within the next year. One ex-hedge fund manager whose team predicted Nvidia's rise in 2020 calls this the AI End Game, and he says there are three critical moves every American should make in the next 12 months to protect and grow their wealth through this paradigm shift.
See the three moves before the AI split happensThe company reported revenue of $13.7 billion, beating analyst expectations of $13.37 billion. On the bottom line, the results were even stronger: non-GAAP earnings per share (EPS) were $0.15, nearly double the consensus estimate of $0.08.
Normally, beating expectations on both top and bottom lines sparks a rally. This time the opposite happened because the market is pricing in a permanent failure based on what the data suggests is a temporary disruption. For value investors willing to look past short-term volatility and sensational headlines, the sell-off may present a rare entry point into a blue-chip technology company trading at a distressed price.
The Revenue Cliff: A Supply Chain Story
If the fourth-quarter numbers were solid, why did the stock crash? The anxiety centers entirely on guidance for the first quarter of 2026. Management forecasted revenue between $11.7 billion and $12.7 billion. The midpoint of that range, $12.2 billion, missed Wall Street's expectations and created a revenue cliff that spooked investors focused on near-term growth models.
Context matters. The lower guidance was not driven by a sudden lack of customers or canceled orders but by severe supply constraints. According to CFO David Zinsner, the company has effectively depleted its buffer inventory — Intel sold through the chips it had in late 2025 and is entering 2026 in a hand-to-mouth position where it cannot manufacture chips fast enough to meet demand.
The bottleneck flows directly from an aggressive technology transition. Intel is ramping production of its 18A node, an advanced manufacturing process central to its future competitiveness.
Products built on this node, such as the newly launched Core Ultra Series 3 (Panther Lake), are shipping to customers. But advanced manufacturing is notoriously difficult. CEO Lip-Bu Tan said that yields are improving steadily, yet they are not yet high enough to support full-volume production.
With a silicon shortage, management made a strategic choice: prioritize wafer supply for the Data Center and AI (DCAI) segment over the Client (PC) segment. Data-center chips generally deliver much higher margins than laptop or desktop chips. By allocating limited capacity to its most profitable customers, Intel is protecting long-term financial health and relationships with major hyperscalers, even though this reduces current-quarter revenue.
Why the Bottom Won't Fall Out
In prior semiconductor downturns, investors legitimately worried about Intel's ability to meet obligations. That fear no longer aligns with the balance sheet. The company has built a substantial financial safety net: it exited 2025 with $37.4 billion in cash and short-term investments. This liquidity gives Intel ample runway to address yield issues without taking on additional debt or diluting shareholders by issuing more equity.
The company's strategy has also been validated by heavyweight investors. In late 2025, Intel closed a $5 billion investment deal with NVIDIA. That NVIDIA — the leader in AI hardware — chose to buy a significant equity stake signals confidence in Intel's manufacturing roadmap. For retail investors, that is a meaningful vote of confidence: if NVIDIA (NASDAQ: NVDA) is betting billions on Intel's manufacturing capabilities, the market panic over yields looks overstated.
Intel is also making organic progress in AI hardware without relying solely on acquisitions. The proposed purchase of SambaNova Systems fell through, but Intel's internal gains tell a different story. Its custom ASIC (Application-Specific Integrated Circuit) business has reached an annualized revenue run rate of about $1 billion. That demonstrates Intel can win in AI hardware with its own engineering, reducing the need for expensive bolt-on deals.
Valuation also provides a downside cushion. Trading in the low $40s, Intel is approaching a price-to-book ratio (P/B) of roughly 2x (up from as low as 0.8x at $19). That compares with peers such as AMD (NASDAQ: AMD), which trade at higher multiples (around 7x) that often price in years of flawless execution. Intel, by contrast, is priced for disaster — much of the bad news on yields and supply appears baked into the stock, which limits further downside risk.
Front-Running the Supply Fix
The evidence indicates the first quarter of 2026 will likely mark Intel's operational trough. The supply constraints causing today's pain are expected to ease beginning in the second quarter. As yields on the 18A node improve, inventory buffers should rebuild and revenue can move back toward seasonal norms over the remainder of the year.
Institutional investors and analysts are already looking past the current dip. After the earnings release, Citic Securities upgraded the stock to Buy with a $60.30 price target, and New Street Research raised its target to $50. These firms view the supply bottleneck as a temporary engineering challenge rather than a permanent structural flaw.
For investors with a long-term horizon, the recent double-digit drop presents a compelling buying window. It gives patient capital an opportunity to acquire a revitalized, cash-rich American manufacturer at a distressed price just before factories catch up with demand. It also lets investors who exited too early reestablish positions at a lower price, potentially ahead of the rebound as the supply situation normalizes and the stock re-rates.
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