Shares of Intel (NASADQ:INTC) plummeted in late April after the chipmaker reported first-quarter numbers that included a sizable cut to the full-year guide and a far-below-consensus second quarter guide. Intel stock, which had rallied big into the print, dropped more than 10% after the numbers hit the tape.

The big takeaway? Slowing global economic expansion continues to create demand headwinds across the semiconductor market, specifically in the data center market, and these headwinds are producing sub-par revenue and profit numbers for Intel.

This sell-off was necessary. Even as a long term bull on Intel stock, I noted that the stock was overvalued heading into first-quarter earnings, and told investors to sell above $55. As such, I’m not terribly surprised that INTC is dropping here.

Nor am I terribly surprised that the numbers weren’t that good. The growth narrative at Intel is all about the data center market, but three of the biggest players in that market – Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN) – reported weaker-than-usual capital spending this past quarter.

Clearly, this trend was not isolated. Deteriorating economic conditions broadly reduced IT spend everywhere. Naturally, when that happens, Intel’s numbers get worse.

For largely the same reasons, I won’t be surprised when Intel stock rebounds from this sell-off in later 2019. INTC stock is getting hit hard today because of a global semiconductor market slowdown. This slowdown won’t last forever. Indeed, the market should improve dramatically throughout the year. As it does, Intel stock should rebound.

Overall, then, I’m bullish on INTC stock again. The stock got ahead of itself, reported not-so-great numbers, and sold-off. Now, the stock is pretty cheap again, the long term growth drivers remain healthy, and the narrative lends itself to a nice rebound over the next few months.

Intel Got Ahead of Itself

In the big picture, Intel simply got ahead of itself before the first quarter print.

Last quarter, Intel delivered sub-par numbers that reflected reduced global IT spend as a result of deteriorating economic conditions, as well as increasingly unfavorable supply-demand fundamentals in the semiconductor market. But, investors looked past those results over the last few months as economic conditions have broadly improved. The consensus was this global economic recovery was going to naturally lead to a recovery in the semiconductor market, and a recovery in Intel’s numbers.

That will happen. But, not yet.

Global semiconductor market conditions remain unfavorable. Supply continues to build. Demand continues to be adversely impacted by slowing economic expansion. Global IT spend remains muted relative to record 2018 levels. All in all, the global semiconductor is still normalizing lower after several years of record results.

Intel’s numbers reflect this reality. Revenues are retreating, and expected to keep retreating for the foreseeable future. Margins are falling back from record levels. Same with profits. Broadly speaking, then, the Intel growth narrative is slowing, and it will continue to slow for the next few months.

Intel stock wasn’t priced for this. Investors thought that the worst was over. It isn’t. As such, the stock is being re-priced for operational turbulence to persist.

Things Will Improve

Although operational turbulence will persist for now, it won’t persist forever, and things will inevitably improve, probably by the back half of 2019. As they do, Intel stock will recover from this steep post-earnings sell-off.

In words, the thesis here is simple. The global economy slowed in late 2018. Corporate spending globally slowed in response, which created demand headwinds across the whole semiconductor market. The economy is now improving. Corporate spending globally will improve, too, but it will take time, as all recoveries do.

Thus, while Intel’s numbers likely won’t get better today or tomorrow, they should broadly improve by the end of the year, and continue to improve thereafter thanks to the strength of the company’s secular AI and data tailwinds.

The numbers corroborate this thesis. Second quarter 2019 revenues are projected to be down 8% year-over-year, with the implication being that first half 2019 revenues will be down more than 4% year-over-year. But, full-year 2019 revenues are projected to be down just 3% year-over-year, and if you do that math on that, then second half 2019 revenues are expected to be down just 1.6%. That’s a big improvement from the second quarter’s projected 8% decline.

Thus, management is guiding for substantial growth trend improvement from now into the end of the year. That matches up with the story, which is one comprised of a global semiconductor market that took a step back, is finding its footing now, and will start marching forward again soon.

Overall, then, things at Intel should improve throughout the rest of the year. As they do, Intel stock will rebound. Long term, fundamentals continue to imply that this stock has fundamentally supported upside to $56 in 2019.

Bottom Line on Intel Stock

INTC stock got ahead of itself heading into the first-quarter print. That print wasn’t good, and broadly implies that it will take longer than expected for the semiconductor market to recover. As such, the stock is taking a step back here.

But, the semiconductor will improve, eventually, and most likely by the back-half of 2019. As it does, Intel stock will recover from this sell-off, and ultimately head back to levels above $55. Thus, this recent dip INTC stock looks like a pretty good buying opportunity.

As of this writing, Luke Lango was long INTC, FB, and AMZN.