Stock surge meets post-earnings reality
After a powerful rally fueled by comeback hopes, Intel shares reversed sharply following the company’s fourth-quarter earnings, highlighting the uneven path ahead for the chipmaker.
Intel stock had climbed nearly 50% in the month leading into earnings, driven by renewed investor optimism and recent strategic developments. That momentum unraveled on Friday, with shares falling more than 17% as markets reassessed the company’s near-term outlook.
Momentum built on expectations, not execution
The rally was supported by several catalysts, including investments tied to U.S. industrial policy, backing from Nvidia, improving sentiment around traditional chip demand from AI data centers, and the rollout of Intel’s Panther Lake processors using its 18A manufacturing process.
However, analysts warned that such a rapid run-up into earnings left little room for disappointment. While Intel beat expectations for the fourth quarter, its guidance for the first quarter fell short, undermining confidence in the durability of the recent gains.
Supply constraints expose operational limits
Intel is currently struggling to meet demand for its server processors due to internal manufacturing bottlenecks. Analysts point to inefficiencies in factory utilization and possible underestimation of AI-related data center demand as key challenges.
Management acknowledged these constraints, noting efforts to increase output and efficiency across its manufacturing network. Still, the disconnect between investor enthusiasm and operational reality became evident in the market reaction.
Competitive pressure weighs on the turnaround
Intel continues to lose market share in its core CPU business to rivals, complicating the economics of running its manufacturing operations without major external customers. While speculation has circulated about potential large foundry clients, no confirmed deals have materialized.
At the same time, rising costs tied to new manufacturing processes are expected to pressure margins as the company works to close the gap with industry leaders.
Long road ahead for the foundry business
Intel has indicated that customers for its next-generation 14A process may be announced in late 2026 or early 2027. Even then, meaningful revenue contribution would likely arrive several years later.
Analysts broadly agree that stabilizing and scaling the foundry business will be a long-term effort, with progress measured over years rather than quarters.
