Intel’s fourth-quarter earnings report was supposed to confirm its comeback. Instead, it triggered a brutal reality check. On Friday, August 23, shares of Intel (NASDAQ: INTC) plunged 17%, wiping out over $30 billion in market value and marking the chipmaker’s worst single-day performance since August 2024.
The selloff followed a month-long rally that saw Intel’s stock surge nearly 50%, driven by optimism around AI infrastructure demand, government and Nvidia-backed investments, and the unveiling of its Panther Lake chip built on the advanced 18A process. But as Bernstein analyst Stacy Rasgon put it, "If your stock price is rising like that before earnings, you’d better have a perfect report card." Intel didn’t.
What Went Wrong: Strong Q4, Weak Q1 Outlook
Intel’s Q4 2025 results actually beat expectations:
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Revenue: $13.7 billion (vs. $13.4 billion expected)
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Adjusted EPS: $0.15 (vs. $0.08 consensus)
But the company’s Q1 2026 guidance disappointed:
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Revenue forecast: $11.7B–$12.7B (midpoint $12.2B vs. $12.5B expected)
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EPS forecast: Breakeven, with no meaningful profit expected
The weak outlook was blamed on internal supply constraints, particularly in meeting demand for server CPUs used in AI data centers. Intel CEO Li-Wu Chen acknowledged the issue, saying the company is "working tirelessly to improve manufacturing efficiency and output."
The AI Demand Gap: Intel Wasn’t Ready
Intel’s inability to meet surging AI server chip demand exposed two major problems:
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Underutilization of manufacturing equipment
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Underestimation of hyperscaler demand for CPUs
Analysts say Intel was caught flat-footed. Despite bullish forecasts and high-profile support—including a social media endorsement from President Trump—the company’s internal capacity wasn’t ready to deliver.
This gap between hype and execution triggered what Rasgon called a "huge disconnect" between investor expectations and operational reality.
Panther Lake and the 18A Process: A Technical Milestone, But Not Enough
Intel’s launch of its Panther Lake chip, built on the 18A process, was supposed to be a turning point. The chip represents Intel’s most advanced node yet, aimed at reclaiming leadership in process technology.
But the product launch couldn’t offset the broader concerns:
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Manufacturing delays
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Limited external foundry clients
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No confirmed Apple partnerships despite persistent rumors
Without major external customers, Intel’s high-cost manufacturing model remains difficult to justify.
Competitive Pressure: AMD and Arm Keep Gaining Ground
Intel’s CPU business continues to lose market share to AMD and Arm, especially in PCs and data center servers. This erosion makes it harder for Intel to scale its foundry business or attract new clients.
Meanwhile, TSMC remains the dominant force in global chip manufacturing. Intel’s efforts to catch up—including its next-generation 14A process—won’t bear fruit until 2028 or 2029, according to HSBC analyst Frank Lee.
Intel says it will announce its 14A customer list in late 2026 or early 2027, but revenue recognition will take years.
Foundry Ambitions: A Long Road Ahead
Intel’s foundry business is central to its turnaround story. But analysts say it’s far from a "clean" investment narrative.
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Execution issues have delayed progress
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Capital expenditures are rising
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Customer acquisition remains slow
Rasgon believes the restructuring could take up to 10 years to fully resolve. Lee adds that Intel’s story is "difficult to trade" because of its complexity and long timelines.
Investor Sentiment: From Meme Stock to Reality Check
Intel’s stock had become a speculative favorite in recent weeks, with some traders treating it like a meme stock. The rally was fueled by:
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Government and Nvidia investments
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AI data center optimism
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Trump’s public support
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Panther Lake hype
But Friday’s plunge reminded investors that execution still matters. Intel’s turnaround may be underway, but it’s far from complete.
What to Watch Next
1. Q1 Execution
Can Intel resolve its supply bottlenecks and meet AI server chip demand?
2. Foundry Customer Wins
Will Intel secure major clients for its 14A process?
3. Competitive Positioning
Can Intel regain share from AMD and Arm?
4. Capital Discipline
How will Intel manage rising costs amid weak profitability?
5. External Partnerships
Will rumored deals with Apple or other tech giants materialize?
Conclusion: A Harsh Reminder That Turnarounds Take Time
Intel’s 17% drop wasn’t just about earnings—it was about credibility. The company’s AI narrative, while compelling, is still constrained by manufacturing realities and competitive pressure.
For investors, the message is clear: Intel’s recovery won’t be linear. The company may eventually regain its footing, but the road ahead is long, expensive, and full of execution risk.