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A few years ago, many investors would have guessed that Intel (INTC) was poised to be the biggest winner from artificial intelligence. Now we know those guesses would have been dead wrong. The once-dominant chipmaker has suffered as AI has taken center stage.
There are several reasons why Intel, one of the most prominent chip companies of the 1990s, failed to benefit from AI and eroded massive shareholder wealth in the process.
Now though, new CEO Lip-Bu Tan is determined to turn things around. Under his leadership, the company is striving to finally become relevant in the AI race.
18A to 14A: What Difference Does It Make?
As part of this turnaround strategy, the company is allegedly considering stopping marketing its 18A manufacturing process to double down on selling its 14A to new customers. Aiming to better compete with foundry rivals Taiwan Semiconductor (TSM) and Samsung, the 14A technology offers superior performance, power efficiency, and transistor density with full-scale adoption of High-NA EUV lithography.
The 18A process uses Low-NA EUV Lithography. High-NA EUV lithography is considered superior, as it offers finer resolution, better pattern fidelity, and more precise, dense, and cost-effective transistor layouts at sub-2-nanometer scale. Moreover, Intel is widely recognized as the first chipmaker expected to deploy High-NA EUV lithography at commercial scale, ahead of TSMC and Samsung, which could provide the beleaguered chip major a technological and strategic edge.
So, will Intel finally have its day in the sunshine and embark on a long-awaited path of share price appreciation? Or is it just too late to the AI party? Let's find out.
Intel Is Trying to Regain Lost Glory
At its peak, Intel commanded a market cap near $500 billion. Those days are long gone, with the company’s market cap now languishing at $96 billion, with its stock down more than 30% over the past 52 weeks.
New CEO Lip-Bu Tan, though, is looking to take the company back to its heady days.
As AI workloads increase across client and server platforms, Intel is increasingly coordinating its product development roadmap with these developments. An embedded neural engine built into its new Core Ultra Series-2 chips, which started mass production this year, manages AI inference on the chip itself. This development puts Intel in a strong position ahead of a long-overdue cycle of PC upgrades and supports the industry’s overall shift toward on-device computation.
Meanwhile, its Gaudi 3 accelerator lineup is outperforming Nvidia’s (NVDA) H100 units in terms of cost per AI token and energy efficiency. Additionally, these chips are completely compatible with the main AI frameworks, confirming Intel’s increasing relevance in high-performance AI computing. Through a combination of architectural innovation and its expanding third-party manufacturing capabilities, Intel aspires to become the go-to domestic supplier for cutting-edge semiconductor logic, an ambition made even more plausible by growing demand for AI infrastructure and a global push toward geographically diversified chip production.
Meanwhile, with the PC segment poised for a meaningful refresh cycle after an extended lull, Intel stands to benefit significantly, especially given its commanding position in the commercial notebook space, where it controls over 70% of the market. The new Core Ultra 200-series features a built-in neural processor capable of handling local AI workloads, including image synthesis and small-scale language models. This capability minimizes reliance on cloud infrastructure, improving latency and addressing key bottlenecks in the user experience.
However, there are questions about Intel’s intentions to abandon 18A in favor 14A. This generally centers on the company’s history of changing course from 20A in order to drive the speed of 18A deployment. A similar situation could happen now as 18A is set for high-volume production in the second half of 2025. If the company pivots sharply, it would be choosing to forgo the expected revenue and production and commercialization timelines associated with 18A.
Additionally, the company is becoming more exposed to the pressures of escalating trade tensions between the United States and China. Export controls have generally targeted high-performance computing chips that go into data centers. If these controls are expanded to mainstream processors, it would put some of its Client Computing Group revenue (that still heavily relies on China) in jeopardy.
Financials Are Weak But Improving
Although Intel beat earnings estimates in the last two quarters, its record is patchy at best. For instance, in the most recent quarter, even though the company’s earnings and revenues came in ahead of the Street estimates, earnings declined while sales remained flat on a year-over-year basis.
The company reported flat revenues of $12.7 billion with its gross margin down to 36.9%. Adjusted earnings went down to $0.13 per share from $0.18 per share in the year-ago period.
However, the company’s cash flow activities provided some comfort as it reported net cash from operating activities of $813 million Q1 2025 compared to an outflow of $1.2 billion in Q1 2024. Overall, Intel closed the quarter with a cash balance of $8.9 billion, higher than its short-term debt levels of $5.2 billion.
In Q2 2025, Intel is projecting net revenues to be in the range of $11.2 billion to $12.4 billion. Analysts are calling for EPS to fall more than 50% in Q2 and for revenue to fall 7.4%.
Analyst Opinions on INTC Stock
Analysts have deemed INTC stock to be a “Hold” with a mean target price of $22.45, slightly lower than its current trading price. Out of 38 analysts covering the stock, one has a “Strong Buy” rating, 32 have a “Hold” rating, and five have a “Strong Sell” rating.
