Intel Corporation INTC has risen 10.6% in the past three months against the industry’s decline of 24.6%, outperforming its peers Advanced Micro Devices, Inc. AMD and NVIDIA Corporation NVDA. Advance Micro has declined 20.5%, while NVIDIA plunged 26.1% over the same period.
Three-Month INTC Stock Price Performance
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Unchanged Core Strategy Fueling INTC?
With the appointment of David Zinsner and Michelle Johnston Holthaus as interim Co-CEOs in place of erstwhile CEO Pat Gelsinger, Intel is undertaking a comprehensive review of its businesses to put the company back on its growth trajectory. Interim management has vouched to keep the core strategy unchanged despite efforts to drive operational efficiency and agility. The company is emphasizing the diligent execution of operational goals to establish itself as a leading foundry.
Intel is witnessing healthy traction in Artificial Intelligence (AI) PCs that have taken the market by storm. It remains firmly on track to ship more than 100 million by the end of 2025. Panther Lake — the chip based on Intel 18A and the architectural successor to the well-received Lunar Lake – is slated to be launched in the second half of 2025, while Clearwater Forest — the first Intel 18A server product — is likely to be unveiled in the first half of 2026.
The company has introduced the Intel Core Ultra, which features a neural processing unit that enables power-efficient AI acceleration with 2.5x better power efficiency than the previous generation. With superior GPU and CPU capabilities, it can speed up AI solutions. The company also launched the new vPro platform with an Intel Core Ultra processor that delivers enhanced power efficiency. With dedicated AI acceleration capability spread across the CPU, GPU and the new neural processing unit, it will unlock an endless new wave of AI experiences across all apps. This is likely to give healthy competition to NVIDIA and Advanced Micro’s new GPU lineups for PC gaming.
INTC Focusing on AI Chips, 5N4Y
Intel remains on track with its 5N4Y (five nodes in four years) program to regain transistor performance and power performance leadership by 2025. Intel Xeon platforms have reportedly set the benchmark in 5G cloud-native core with substantial performance and power-efficiency improvements, additional power-saving capabilities and easy-to-deploy software. This has triggered healthy demand trends from major telecom equipment manufacturers and independent software vendors to optimize and unleash proven power savings for a more sustainable future.
The company recently launched Xeon 6 processors with Performance-cores (P-Cores). This system-on-chip has been designed to cater to the huge demand for high AI workloads across diverse sectors. With industry-leading performance across data center workloads and up to two times higher performance in AI processing, the Xeon 6 family delivers the industry’s best central processing unit for AI at a lower total cost of ownership.
The Intel Xeon 6 processor for network and edge platforms leverages Intel’s built-in accelerators for virtualized radio access networks (vRAN), media, AI and network security to address the growing demand for network and edge solutions in an AI-driven world. It delivers up to 2.4x the RAN capacity and a 70% improvement in performance-per-watt compared to previous generations, thanks to Intel vRAN Boost.
Margin Woes, Frigid Trade Ties Hurt INTC
An accelerated ramp-up of AI PCs for an early-mover advantage has significantly affected Intel’s short-term margins, as it shifted production to its high-volume facility in Ireland, where wafer costs are typically higher. Margins were also adversely impacted by higher charges related to non-core businesses, charges associated with unused capacity and an unfavorable product mix. Competitive pricing pressure from rivals has further dented its profitability.
Moreover, China accounted for more than 29% of Intel’s total revenues in 2024, making it the single largest market for the company. However, the communist nation’s purported move to replace U.S.-made chips with domestic alternatives significantly affected INTC’s revenue prospects. The directive to phase out foreign chips from key telecom networks by 2027 underscores Beijing’s accelerating efforts to reduce reliance on Western technology amid escalating U.S.-China trade and tariff tensions.
As Washington tightens restrictions on high-tech exports to China, Beijing has intensified its push for self-sufficiency in critical industries. This shift poses a dual challenge for Intel, as it faces potential market restrictions and increased competition from domestic chipmakers. In addition, weaker spending across consumer and enterprise markets, especially in China, resulted in elevated customer inventory levels.
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Estimate Revision Trend of INTC
Earnings estimates for Intel for 2025 have moved down 76.7% to 48 cents over the past year, while the same for 2026 have declined 48.9% to $1.13. The negative estimate revision depicts bearish sentiments for the stock.
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End Note
Intel’s innovative AI solutions hold immense promise for the broader semiconductor ecosystem. By addressing the challenges of scalability, performance and interoperability, it is paving the way for widespread AI adoption across enterprises worldwide. Management is focusing on simplifying parts of its portfolio to unlock efficiencies and create value. It has aimed to allay investor concerns by reiterating its short-term guidance while maintaining its core focus. All these efforts appear to resonate well, as exhibited by an uptrend in the stock price performance.
However, the recent product launches appear “too little too late” for Intel. In addition, margin woes amid strict export restrictions, unfavorable product mix and elevated customer inventory levels weigh on its bottom line. Declining earnings estimates remain an overhang. With a Zacks Rank #3 (Hold), Intel appears to be treading in the middle of the road, and investors could be better off if they exercise caution and stay invested for long-term gains. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).