After underperforming for many years, Intel (NASDAQ:INTC) stock has performed very well in 2023.

Up by more than 26% since January, investors have been cycling back into INTC stock, in the hopes the chip maker pulls off a successful multi-year turnaround.

But while bottom-fishers profited from this rising optimism during the first half of the year, it’s far from certain a similar situation will play out between now and year’s end.

In fact, just a few weeks from now, pessimism about the company’s future prospects could bounce back up, following the release of its latest quarterly results.

If that’s not bad enough, even if the company provides some positive surprises in its results/updates to outlook, that still may not be a sign that INTC’s rally will continue. Other events could lead to underwhelming returns down the road and sour sentiment.

INTC Stock Earnings Preview

Post-market on July 27, Intel will release its numbers for the quarter ending June 30. As you may recall, the company beat expectations last quarter.

Well, to put it more accurately, Intel’s reported results for the March quarter were “less bad” than expected.

Revenue of $11.7 billion came in ahead of estimates ($11.1 billion). Losses were also narrower-than-expected, coming in at 4 cents per share, versus sell-side consensus calling for losses of 15 cents per share.

So, will INTC beat forecasts again? Since the last earnings call, analyst consensus for Q2 earnings per share have fallen from 1 cent to negative 4 cents per share.

The latest semiconductor industry data signals that demand, especially in key end user markets for Intel (like PCs and data centers) remains soft.

That said, it’s not set in stone that the company will fail to report even just “less bad” numbers.

For instance, soft demand notwithstanding, Intel’s CFO David Zinsner said that revenue for Q2 would come in near the top end of prior guidance. Still, I wouldn’t view this as a reason to buy INTC stock whether before or after the July 27 earnings release.

A Big Risk Will Remain, Irrespective of Q2 Results

So, why not run out and buy INTC before earnings, given the aforementioned factors possibly leading to an earnings beat? For one, even if the company beats expectations, don’t assume this will translate into a post-earnings surge for the stock.

Last quarter, when the company delivered its “less bad” results, INTC stock only made a moderate move higher, pulling back shortly afterwards. Much of the stock’s gains this year have arrived more recently, during June.

This rally may have priced-in much of the impact of revenue/earnings improvement during Q2. Hence, just like the last earnings report, a post-earnings move higher may be modest at best.

Irrespective of whether Q2 figures are strong, satisfactory, or weak, a big risk still threatens future returns. As I have noted previously, the main one is the big gamble Intel is taking, with its efforts to become a major global chip foundry.

Spending tens of billions of dollars to build new chip plants around the world, Intel is trying to buy its way into a mature, highly-competitive industry. This could prove easier-said-than-done.

Instead of helping the company return to high earnings, this gambit could end up being a drag on earnings instead.

Bottom Line

Worse yet, Intel’s decision to put most of its eggs in the foundry basket leaves it poised to revert to its past poor-performer status, for other reasons.

Focusing on this lower-margin, commodified industry provides management with less capacity to work on its endeavors that may have greater payoff potential, like artificial intelligence (or AI) computing chips.

Speaking of which, while other chip makers are moving further ahead with AI chips, improvements in Intel’s operating results in the quarters ahead hinge more highly on PC and non-AI data center demand picking back up.

A return to pandemic-era levels of demand in these markets may take years. Sentiment has tilted back towards positive, but this by-and-large remains a “show me” stock in Wall Street’s eyes.

With near-term positive surprises unlikely to outweigh longer-term issues, continue to hold off on INTC stock.

INTC stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.