After the selloff, Intel must prove the turnaround can scale
A weak forecast jolted investors. When markets reopen, execution, not optimism, will be on trial.
Intel’s quarterly report brought both the company and its stock back down to earth after months of renewed optimism. While Intel surprised investors with stronger-than-expected revenue and profit, a disappointing forecast for the current quarter sent the shares sharply lower. Intel stock closed at $45.07 on Friday, down 17% on the day, marking the company’s biggest single-day selloff since Aug. 2, 2024, when the shares plunged 26%.
The report was a reminder that despite government support and a high-profile partnership with Nvidia, Intel remains in the midst of a deep crisis, and that the road to recovery is still long.
The previous six months had been nothing short of a dream for Intel shareholders. After years of missed targets, strategic missteps, and eroding market share, the stock began to rally in mid-September, climbing more than 118% and reaching a roughly five-year high on January 22.
Investor optimism was driven by several factors. First was the leadership shake-up and the appointment of Lip-Bu Tan as CEO last April. One of the most influential figures in the semiconductor industry, Tan arrived with a clear message: restore Intel’s engineering culture and refocus the company on product excellence and long-term strategy rather than short-term financial optics. The layoffs that accompanied his arrival, about 22,000 employees, or roughly 20% of Intel’s workforce, also helped convince investors that Intel was becoming leaner and more disciplined.
The real turning point, however, came in the second half of 2025. It began with what could have become a defining crisis: a public attack by former U.S. President Donald Trump. Tan’s background and business ties to China made him a target, prompting Trump to call for his resignation.
Intel appeared to face two bad options: replace a second CEO in less than six months, or confront one of the most vindictive presidents in modern history. Tan chose a third path, turning Trump from adversary to ally. Through a mix of political maneuvering and promises of investment, Tan not only reversed Trump’s stance, Trump later calling the outcome “an incredible success,” but helped convert a federal grant into a $10 billion government investment.
The U.S. government became a significant Intel shareholder, aligning the company’s success with American industrial policy. For investors, that political backing was viewed as a meaningful advantage.
Momentum continued to build. Roughly a week later, SoftBank disclosed a $2 billion investment in Intel shares, adding another vote of confidence from a highly regarded technology investor.
An even more consequential development followed in mid-September: Nvidia invested $5 billion in Intel, alongside a collaboration to develop data-center processors integrated with Nvidia’s AI chips. Given Nvidia’s dominant position in the AI boom, with a market value of about $4.45 trillion, its financial and strategic commitment significantly boosted sentiment toward Intel.
These developments ignited the rally in Intel’s stock, and subsequent operational updates helped sustain it. In November, Intel reported progress in ramping production of its advanced 18A manufacturing process, central to its next-generation CPUs and foundry ambitions. That same month, reports emerged that Intel’s Arizona facility had begun providing chip-packaging services to customers including Nvidia, Tesla, and Microsoft.
Early 2026 brought additional optimism. Analysts reported that Intel had effectively sold out most of its CPU production capacity for the year, benefiting from demand generated by the AI boom. While AI workloads rely primarily on GPUs, they also require CPUs to handle general-purpose computing tasks, driving incremental demand for Intel’s products.
That demand, however, has yet to translate into stronger financial results. In the fourth quarter of 2025, Intel’s revenue fell 4% to $13.7 billion. Growth in data-center revenue (up 9% to $4.7 billion) and foundry revenue (up 4% to $4.5 billion) failed to offset a 7% decline in the PC segment, which fell to $8.2 billion. Net losses widened sharply, from $100 million to $600 million. Still, these results exceeded analysts’ expectations and did not alarm investors.
What did was Intel’s outlook. The company forecast first-quarter revenue of $11.7 billion to $12.7 billion, with a midpoint below Wall Street estimates of $12.6 billion. More troubling was Intel’s projection of zero adjusted profit, compared with analyst expectations of 6 cents per share.
According to Tan, the issue is not weak demand but limited supply. Intel has struggled to produce enough chips to meet customer needs. In the fourth quarter, the company relied heavily on inventory to satisfy demand, but those reserves are now exhausted.
Intel has described the situation as a “bottleneck of success,” arguing that the shortfall stems from its rapid transition to the new 18A production technology. The company says it is investing billions in equipment to relieve the bottleneck and expects supply and profitability to improve as early as the second quarter of 2026.
This is, in theory, a preferable problem to having no customers at all. But markets are impatient. If Intel fails to increase production quickly, customers will turn elsewhere, and Intel will forfeit revenue it can ill afford to lose. For investors still scarred by years of disappointment, the latest report was enough to prompt a swift exit.
The selloff does not necessarily signal a reversal of the broader trend. Demand for AI infrastructure remains strong, and market conditions still favor Intel, if it can execute. For now, however, the earnings report served as a reminder that the turnaround is far from complete. Intel has regained hope. It has not yet regained trust.
