Intel Outperforms Competitors Amid Industry Struggles

Intel Corporation (INTC) experienced a 10.6% increase in share price over the past three months, standing in stark contrast to a substantial 24.6% decline in its industry. This performance surpasses that of competitors Advanced Micro Devices, Inc. (AMD), which fell by 20.5%, and NVIDIA Corporation (NVDA), which saw a significant 26.1% drop during the same period.

Three-Month INTC Stock Price Performance

Image Source: Zacks Investment Research

New Leadership’s Commitment to Core Strategy

With the recent appointments of David Zinsner and Michelle Johnston Holthaus as interim Co-CEOs, replacing former CEO Pat Gelsinger, Intel is initiating a thorough review of its operations to return to its growth path. The interim management has pledged to keep the company’s core strategy intact while pursuing greater operational efficiency and agility. Their focus remains on executing operational goals to solidify Intel’s position as a leading foundry in the semiconductor market.

Intel is realizing noteworthy traction in the Artificial Intelligence (AI) PC sector, projecting the shipment of over 100 million units by the end of 2025. Upcoming products include Panther Lake, utilizing Intel’s advanced 18A technology—set to launch in late 2025—and Clearwater Forest, the first server product based on this technology, expected in the first half of 2026.

The newly introduced Intel Core Ultra features a neural processing unit that enhances AI acceleration while achieving 2.5x better power efficiency than its predecessor. It combines advanced GPU and CPU capabilities to optimize AI solutions. Additionally, the company has rolled out the vPro platform featuring this processor to further enhance power efficiency, aiming to provide competitive solutions against NVIDIA and AMD’s latest GPU offerings for PC gaming.

Strategic Focus on AI Chips and Performance Improvement

Intel is committed to its 5N4Y plan (five nodes in four years), targeting improved transistor and power performance leadership by 2025. Recent reports suggest that Intel Xeon platforms are leading benchmarks in 5G cloud-native cores, boasting significant advancements in power efficiency and performance. As a result, demand has surged from major telecom equipment manufacturers and software vendors seeking to leverage these power-saving capabilities for sustainable operations.

The company has also launched Xeon 6 processors that feature Performance-cores (P-Cores). This system-on-chip design addresses the growing requirement for high AI workloads across various industries. The Xeon 6 family offers superior performance in data center workloads and up to twice the efficiency in AI processing, establishing itself as a cost-effective choice for AI applications.

Intel’s Xeon 6 processors for network and edge platforms capitalize on internal accelerators for virtualized radio access networks (vRAN), media, AI, and network security, aimed at fulfilling the rising demand in AI-oriented networking solutions. Compared to prior versions, they deliver 2.4x more RAN capacity and enhance performance-per-watt by 70%, driven by Intel’s vRAN Boost technology.

Market Challenges Weigh on Intel

The rapid introduction of AI PCs aimed at gaining a market lead has negatively impacted Intel’s short-term margins. Shifting production to a high-volume facility in Ireland, known for its higher wafer costs, has compounded these challenges. In addition, increased charges tied to non-core activities and an unfavorable product mix have further squeezed margins, alongside competitive pricing pressures from other chipmakers.

China, historically accounting for over 29% of Intel’s total revenues in 2024, now poses a significant revenue challenge as it moves to substitute U.S.-made chips with domestic options. Beijing’s directive to eliminate foreign chips from telecom networks by 2027 highlights its strategy to reduce dependency on Western technology amidst escalating trade tensions with the U.S.

As the U.S. government tightens restrictions on high-tech exports to China, Beijing’s push for self-sufficiency in critical sectors intensifies. This landscape presents a dual threat to Intel—potential market limitations and rising competition from local chipmakers. Additionally, decreased spending in consumer and enterprise segments, particularly in China, has left customers with excessive inventory levels.

Image Source: Zacks Investment Research

Declining Earnings Estimates

Over the past year, Intel’s earnings estimates for 2025 have plummeted by 76.7% to 48 cents, with the 2026 estimates also down by 48.9% to $1.13. This trend in negative revisions reflects cautious sentiment toward the stock.

Image Source: Zacks Investment Research

Conclusion

Intel’s advancements in AI present significant potential for the semiconductor industry. By tackling scalability, performance, and interoperability, the company aims to facilitate broader AI adoption across enterprises. Management is also focusing on streamlining operations to unlock efficiencies and add value. Aiming to reassure investors, Intel has maintained its short-term guidance while emphasizing core strategies. These initiatives appear to be positively impacting stock performance.

Nonetheless, recent product launches may seem insufficient and arrive late to counteract Intel’s current challenges. Ongoing margin pressures, strict export regulations, an unfavorable product mix, and high inventory levels continue to strain profitability. The decline in earnings estimates remains a significant concern. With a Zacks Rank of #3 (Hold), Intel suggests a careful approach for investors looking to balance risk and seek long-term gains. For those interested, you can view a complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks’ Research Chief Identifies “Stock Most Likely to Double”

Our team of experts has recently compiled a list of five stocks with the highest potential to gain 100% or more in the coming months. From that list, Director of Research Sheraz Mian highlights one stock poised for substantial growth.

This standout pick is among the most innovative financial firms, featuring a rapidly growing customer base (currently over 50 million) and a diverse array of cutting-edge solutions. While not all elite recommendations convert into winners, this stock has the potential to outperform previous Zacks stock picks, such as Nano-X Imaging, which surged by 129.6% in just nine months.

Free: Discover Our Top Stock and 4 Runners Up

Want the latest recommendations from Zacks Investment Research? Download the 7 Best Stocks for the Next 30 Days today. Click to access this free report.

Intel Corporation (INTC) : Free Stock Analysis report

Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis report

NVIDIA Corporation (NVDA) : Free Stock Analysis report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.