Intel Share Price Analysis: Bullish Rally, Overbought Signals, and What Comes Next

Intel Share Price Analysis: Bullish Rally, Overbought Signals, and What Comes Next

Intel shares have experienced a strong bullish rally over the past three weeks, with the share price rising by approximately 54.07%. While this surge reflects renewed investor optimism, several technical indicators now suggest Intel may be overbought, raising the question: is a bearish reversal imminent, or is the stock simply undergoing a short-term pullback within a broader bullish trend?

What Drove Intel’s Recent Bullish Rally?

Intel’s latest bullish move began on Monday, 29 December, largely driven by surging demand for CPUs. This demand is being fuelled by hyperscale data centres, as companies rapidly expand infrastructure to support AI-driven workloads. The renewed strength in enterprise and data-centre demand has helped shift market sentiment in Intel’s favour after a challenging period.

Technical Analysis: Signs of an Overbought Market

From a technical perspective, several indicators suggest caution may be warranted in the near term:

• Relative Strength Index (RSI) has entered overbought territory on three recent occasions
• The share price is trading above the upper Bollinger Band, often a sign of short-term exhaustion
• Momentum appears stretched following the sharp rally

As a result, attention is now turning to key support levels, including:

• A Fibonacci retracement level around £52.48
• The 20-day, 50-day, and 100-day moving averages, which may act as dynamic support in the event of a pullback

These signals suggest Intel could experience a bearish reversal or consolidation phase before any sustained move higher.

Fundamental Analysis: Explaining Intel’s Extreme P/E Ratios

Fundamentally, Intel currently trades with a trailing P/E ratio of 5,078.77 and a forward P/E ratio of 87.24. While this disparity may appear alarming, it is best explained by distorted recent earnings versus expected recovery.

The extremely high trailing P/E ratio is the result of near-zero earnings over the past 12 months, caused by:

• Aggressive price competition, reducing profit margins
• Restructuring and impairment charges
• Ongoing losses within Intel Foundry Services

Looking ahead, however, Intel is expected to see a gradual earnings recovery over the next 12 months, driven by:

• Improving gross margins
• Enhanced product competitiveness
• Normalisation of PC and data-centre demand

Analyst Sentiment and Price Targets

Most analysts currently maintain a “Hold” rating on Intel shares, reflecting cautious optimism over the company’s long-term recovery. However, with an average price target of $44.55, representing an 8.26% downside, analysts suggest that share prices may weaken further in the short term before the recovery narrative fully materialises.

Outlook for Traders and Long-Term Investors

Short-term traders may find Intel less attractive at present, as overbought technical conditions point towards a potential bearish reversal or corrective pullback.

Long-term investors, however, may view Intel differently. If the company successfully executes its recovery strategy, the next one to two years could present a compelling opportunity as earnings, margins, and competitiveness improve.

Final Thoughts

• Short term: Technical indicators suggest caution
• Medium to long term: Fundamental recovery story remains intact
• Risk remains elevated, but so does long-term potential