In some ways, Intel Corp. is a much different company than it was last time it reported earnings. The company has amassed a string of multibillion-dollar investments that can be seen as a vote of confidence in its business. It also has a new product partnership with Nvidia Corp.

But in other ways, things haven’t changed much for Intel. The company’s business is still faltering, and analysts expect another quarter of essentially stagnant revenue growth when Intel posts results on Thursday afternoon. While new investors are putting their financial might behind Intel, the company still faces challenges with its technology.

Thursday’s report will put Intel’s stock surge to the test, as shares have rallied 62% since the last report.

Intel’s personal computer and server segments are providing “a better industry backdrop than we had previously contemplated,” Wedbush’s Matt Bryson said. Recent increases in average sale prices on older PC models could give a boost to revenue and margin performance in the fourth quarter, he added, while growing artificial-intelligence demand “appears to have also spurred additional standard compute requirements.”

The improved volumes in PCs and servers “should boost utilization and gross margins” for Intel, Bryson continued.

Still, Bryson sees the chip maker’s valuation as “unsustainably rich” after investments from the U.S. government, SoftBank Group Corp. and most recently Nvidia Corp.

Bryson said he and his team can’t quite “justify the company’s recent surge in valuation.” And while they expect Intel’s quarterly results and outlook to come in ahead of expectations, they’re sticking with a neutral view of the stock.

In Wedbush’s view, the deals have “bolstered the balance sheet and created investor optimism,” but done little to change “the fundamental narrative” on Intel’s sales and earnings outlook, or its “progress in improving either its fab operations or chip designs.”

HSBC analysts shared a similar view in a note earlier this month, saying that the recent stock rally looks “overdone.” Despite the potential for a “short-term re-rating,” referring to the idea that the stock’s valuation multiple could still expand, the analysts downgraded Intel’s stock from a hold rating to a reduce rating, based on concerns that the surge isn’t sustainable. 

The HSBC team said Intel’s foundry business, which manufactures chips, “remains the biggest drag on financials with consistent execution failures.”

The Wedbush team said they too think Intel’s success “is primarily dependent on its ability to improve its fab and chip design execution.” Going forward, Intel’s Panther Lake PC chips will be “the next barometer” for this metric, Bryson said. Panther Lake is expected to ramp early next year, so Bryson said any signs of progress are not yet clear.

The last time Intel’s stock was trading at an enterprise value-to-sales ratio near 3.7 times, when looking out three fiscal years, was in late 2023, when Intel was seeing more than $15 billion in quarterly revenue, gross margins in the 50% range and quarterly earnings of about 50 cents a share, Wedbush’s Bryson said. Those financial levels are well above what analysts expect for Intel looking ahead to the next two years, he added.

Estimates for Intel will likely “be revised higher on better near-term industry conditions,” Bryson continued, but he doubts the company will even get “close to approaching these prior levels.”

Meanwhile, Susquehanna’s Christopher Rolland expects Intel to issue weaker-than-expected guidance mainly due to the sale of 51% of its Altera programmable-chips business last month. He is estimating a revenue loss of about $75 million for the third quarter, and for the full $450 million impact to hit in the fourth quarter.

Intel is expected to report revenues of $13.2 billion for the third quarter, and adjusted earnings of 2 cents per share, according to analysts tracked by FactSet. The consensus calls for $8 billion in revenue in its client-computing segment, and $4 billion in sales for its data-center and AI business.