Chipmaker Intel (NASDAQ:INTC) bucked the broader market sell-off on Friday, and with good reason. Intel stock rose 3% in response to strong third quarter numbers which beat on both the top and bottom lines, and included a big lift to the full-year revenue and profit guides. Truth to be told, Intel stock should be up a lot more than just 3%.

This is a really beaten-up stock with a depressed valuation that just reported spectacular numbers which eradicate recent recent market share erosion fears and affirm the strength of Intel’s long-term growth drivers in Data Center, AI, and IoT.

Indeed, if it weren’t for broader market weakness as a result of mixed reports from Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN), I think Intel would be up double-digits in response to the Q3 report.

For now, patience is key, and it will be rewarded. Strong third quarter numbers affirm that Intel stock will get back to $50, and higher. It may take longer than expected because of broader market weakness. But, this stock is already dirt cheap, and has already had its big drop. Plus, the fundamentals are strong and only getting better.

In other words, the bull thesis on Intel stock looks compelling here, even against the backdrop of a depressed stock market.

Intel’s Quarter Was Very Strong

From head to toe, everything about Intel’s third quarter report was very strong.

It was another record revenue quarter, with revenues rising 19% year-over-year. It was also another record profit quarter, with earnings rising nearly 40% year-over-year. The data-centric business continued to impress with 22% revenue growth. Even the PC-centric business did well with revenue growth of 16%.

Data Center Group revenues rose 26%. IoT revenues rose 8%. Gross margins expanded nearly two percentage points. Expense growth lagged revenue growth by 13 percentage points, and the expense rate fell to its lowest level in over a decade; that powered operating margin expansion of five percentage points.

Meanwhile, the guide was just as good. The full-year 2018 revenue guide was boosted by 3%, and revenues are now expected to rise 13% this year, versus up 11% prior. Operating margins in 2018 are now expected to be 34.5%, versus 32% in the prior guide and up 3 percentage points year-over-year. The full-year EPS guide was lifted by 10% and earnings are expected to rise in excess of 30% this year.

Overall, the quarter was very strong. All these murmurs about Advanced Micro Devices (NASDAQ:AMD) stealing share and eating Intel’s lunch? Just murmurs. Intel continues to grow at a robust rate in both its data and PC centric businesses.

All the worries about a supply glut hurting prices and killing margins? Invalid at the moment, as ASPs outside of Client Computing were broadly higher and margins expanded.

In other words, the third quarter report eradicated recent fears, and affirmed that this narrative is still about robust growth in Data Centers, AI, and IoT. Ultimately, a re-calibrating of this narrative from fearful to hopeful will spark a rally in INTC.

Intel Stock Is Way Undervalued

When you look at Intel, you have a stock that is very, very cheap. Even after the post-earnings pop, this is a stock with an 11X forward multiple and a 2.6% dividend yield.

By comparison, the market trades at 16X forward earnings with a 2% dividend yield. Thus, relative to the market, Intel is dirt cheap.

From this perspective, I think Intel can head higher despite broader market weakness. The stock market is adjusting to an era of slower economic growth and higher interest rates. That ultimately translates to lower valuations.

But, INTC stock has seemingly already made this correction. It is down 20% over the past five months and trading at its lowest forward earnings multiple since 2012.

Meanwhile, against that backdrop, Intel just reported numbers which affirm the company’s secular growth drivers. In other words, this is still a growth company with healthy top-line and bottom-line growth prospects.

Those healthy growth prospects simply aren’t priced in at current levels. Given healthy growth fundamentals, INTC stock should trade at a normal valuation, implying nearly 20%-plus multiple expansion potential.

Meanwhile, the stock should also benefit from healthy earnings growth. So, you are talking about a stock with a return profile from current levels in excess of 20% under reasonable assumptions.

That is simply too attractive pass up on. As such, regardless of broader market volatility, I think Intel stock is a good buy at current levels and on the heels of strong Q3 numbers.

Bottom Line on INTC Stock

Intel just reported robust third quarter numbers which affirm the company’s secular growth drivers, and Intel stock remains dirt cheap even after a post-earnings pop. As such, the bull thesis on Intel remains attractive.

As of this writing, Luke Lango was long INTC.