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Key takeaways

• Intel has seen strong market performance in the past months.
• This deviates from a years-long trend. 
• The turnaround can be attributed to new AI deals. 

For nearly four years, Intel's then-CEO, Pat Gelsinger, attempted to turn around the semiconductor giant. But he failed: the company's stock ultimately declined 61% during his tenure.

Gelsinger resigned almost a year ago; his replacement, Lip-Bu Tan, was met almost immediately with a broadside from President Trump, who told Intel's board to oust him due to his China-linked investments and perceived conflicts of interest.

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Defying the odds, Tan survived -- he attracted $16 billion in investments from the US government (which has become Intel's largest single investor with a 10% share), Nvidia, and Softbank; focused on trimming expenses; and gave investors hope that a turnaround is finally underway.

"This funding should help Intel build factories, or fabs, for 14A, the next generation of leading-edge chips," said Brian Coelho, senior equity analyst at Morningstar. "Intel probably wasn't going to make these investments without both financial support and customer interest." 

After years of lagging behind its peers, these recent partnerships appear to have reignited investor confidence; Intel's shares have soared 40.05% since August (when the deals with Softbank and the US government were made), leaving competitors like Qualcomm and AMD in the dust.

A dramatic shift - and what's behind it

Intel's stock plummeted in 2024, and shares remained sluggish in 2025 amid turnaround efforts. In July, shares dropped 8%, wiping out about $8 billion in market value in a single day after Tan warned in the company's second-quarter earnings release of major restructuring and a potential exit from the chip manufacturing business due to difficulties finding a partner.

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The company acknowledged that it needs to make improvements to its business model to drive toward better company performance, disclosing in its second-quarter earnings call that it is working on improving operations through simplifying its business and improving efficiency. That includes layoffs -- Intel has a goal of reducing headcount to 75,000 by the end of 2025, which will mark an over-25,000 employee reduction from the end of 2024. 

The company is "laser-focused on strengthening our core product portfolio," Tan said, which includes leaning into AI offerings. However, he added that the progress will take time. 

Beyond market performance, Intel's financial performance has also been struggling, ending in 2024 with a $18.8  billion net loss on $53.1 billion in revenue. The company's core business showed continued strain in 2025, posting losses of $0.19 per share in the first quarter and $0.67 in the second quarter before recovering to $0.23 per share in the third quarter. Analysts forecast Intel will wrap up the year with $52.5 billion in revenue and $53.7 billion in 2026.

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The genesis of the losses: years of missed opportunities that placed Intel in a disadvantageous position to benefit or compete as the demand for AI tools soared. 

The AI boom has unleashed a big demand for semiconductors, with the worldwide semiconductor revenue totaling $655.9 billion in 2024, a 21% increase from 2023, according to Gartner. The semiconductor components most in demand right now for AI data centers are GPUs used for training and inference.

Intel holds little meaningful share in this high-end data center GPU segment. As a result, Intel dropped from first to third place among semiconductor producers as Nvidia took the top spot. Intel's own discrete GPUs, such as the Battlemage series, have claimed negligible amounts of market share. 

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"In the datacenter, x86 [Intel's architecture used to produce CPUs] is still very important in the data center, but the real growth is with the accelerators -- the GPUs -- and Nvidia dominates that while AMD is starting to make some gains," said Phil Solis, Research Director at IDC.

This comes as a result of Intel continuing to focus a significant portion of its resources on developing Central Processing Units (CPUs), even as the industry signaled a shift. Similarly, Intel missed out on the mobile revolution by turning down iPhone chips in 2007 and failed to invest in generative AI, declining an OpenAI investment in 2018. 

Political viability 

If Intel is struggling, why are companies still investing so much in it? The answer lies in politics as much as economics. Intel holds a unique advantage in the current American political climate under the Trump administration: it is based in the US.

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"The idea that the US government will potentially advantage Intel in some way because they're a domestic company with domestic manufacturing, and that Nvidia might support Intel in some way -I think it's those hopes that have shifted things for Intel," said Matt Bryson, an equity research analyst covering the Enterprise Hardware sector at Wedbush. 

Earlier this year, on what the administration dubbed "Liberation Day," Trump imposed sweeping tariffs on imports from most countries, part of a broader effort to reshore manufacturing and strengthen domestic industry. This same motivation underpins the renewed investment in Intel.

The administration has made semiconductor manufacturing a national priority. US Secretary of Commerce Howard Lutnick described the Intel partnership as central to "reinforcing America's leadership in AI and strengthening national security."

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Two of the world's leading AI firms, OpenAI and Anthropic, are headquartered in the US. With Chinese competitors accelerating their growth, investment in Intel is designed to help the US tech industry preserve its technological lead.
For Nvidia, the investment makes strategic sense: combining Intel's PC footprint with Nvidia's dominance in data centers creates synergy while also aligning with Washington's industrial agenda. The deal could also help smooth relations with President Trump, who has previously criticized Nvidia's market power and targeted its exports to China.

In what would be a self-fulfilling prophecy, the deals could help change Intel's weak performance over the past year. Intel has already been working on competitive products, which it can lean into more with the added funds.

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"We significantly improved our cash position and liquidity in Q3, a key focus for me since becoming CEO in March," said Tan. "The actions we took to strengthen the balance sheet give us greater operational flexibility and positions us well to continue to execute our strategy with confidence."

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