Intel Corporation (NASDAQ:INTC) stock is flying high on Wednesday’s market after the chip maker reported better than expected results for its second quarter on Tuesday afternoon. At time of writing the company’s shares had risen in value by more than 6.5%, but there likely isn’t more on the way according to Sterne Agee. Vijay Rakesh and Troy Cowdrey, who authored a note in response to the earnings, don’t think that the company’s stock will necessarily head higher in the medium term.

Intel

On Tuesday evening Intel Corporation (NASDAQ:INTC) revealed that it earned 55 cents per share in the three months through June, ahead of the 52 cents that analysts were expecting. That gain wasn’t all secured through cost cutting either, the company’s revenue came in at $13.8 billion, ahead of analysts projections of $13.7 billion. Intel is a lot stronger than analysts thought, and it seems that the company’s strength may have been over-represented in yesterday’s report.

Intel gets one-off reprieve

According to the Sterne Agee analysis the Q2 earnings were a strong positive for Intel Corporation, but they are not enough to justify the company’s current valuation. The analysts raised their price target on the company’s stock to $30, well below the $33.95 the stock hit this morning. The consumer market for personal computers is still weak, and the boom in PC demand in this quarter may be a reprieve from a big movement away from the category.

According to the report PC strength in the earnings report was “driven by Corporate and SMB with XP+inventory refresh” that means that the decision by Microsoft Corporation (NASDAQ:MSFT) to discontinue its support for Windows XP is the biggest factor in the rise in Intel Corporation (NASDAQ:INTC) chip sales. Though that’s still a good thing for the company, a rise in chip volume shouldn’t be expected in the medium term on the back of that transition.

Intel looks elsewhere for growth

Intel Corporation (NASDAQ:INTC) may still be reaping benefits from its dominance of the PC market, but the company’s future will rest on its ability to sell different kinds of chips to different kinds of customers. That means that the most important part of the company’s most recent earnings report is in non-PC business. In some areas the company performed well, while it still lagged behind in others.

According to Sterne Agee Intel Coronation (NASDAQ:INTC) performance in the data center market was strong for Intel in the quarter, and the outlook for that part of the company’s business is good. Intel has been investing a huge amount of money into the improvement of its data center offerings as the world heads toward the cloud, requiring more warehouse-based computing power.

Mobile, however, was not as good for Intel Corporation (NASDAQ:INTC) in the second quarter, and the company is likely to face problems in the market for some time yet. According to the Sterne Agee report Mobile Communications is “still a headwind”: for the chip maker. The company is looking at a better 2015 according to the analysis but, for now, that’s not enough to justify the company’s massive valuation.

The Sterne Agee analysts rated Intel Corporation (NASDAQ:INTC) stock a Hold.