Intel results to spotlight turnaround efforts as AI data centers boost chip demand
Intel shareholders are more optimistic about the company’s results than they have been in many quarters; They believe the turnaround promised by CEO Lip-Bu Tan is taking hold and rapid data center deployments are fueling strong demand for traditional server chips.
A series of high-profile investments last year engineered by Tan have piqued investor interest in a stock that could collapse in 2024 after years of management missteps, including a failed AI product roadmap that led to deep competitive losses and thousands of layoffs.
Intel’s shares are up 84% in 2025, far outperforming the 42% rise in the semiconductor index.
The US government’s stake in the company, as well as a $5 billion investment from Nvidia and $2 billion from SoftBank, has strengthened Intel’s balance sheet and given Tan the flexibility to begin reshaping the company’s manufacturing and artificial intelligence strategy.
Tan also overhauled the company’s chip manufacturing operations and tightened its bloated management structure.
“I think this is the most optimistic people have felt about the company in a long time; the short-term dynamics are very well established,” said Ryuta Makino, an analyst at Intel investor Gabelli Funds.
“That’s the real big issue for Intel here; I think there will be at least a double-digit increase in server CPU (central processing unit) prices in 2026.”
At least 10 brokerage firms have raised their price targets or ratings on Intel in the past two months, indicating rising expectations for the company.
Intel’s data center business is expected to grow more than 30% to $4.43 billion in the quarter ending in December, according to data compiled by LSEG.
This jump can be attributed to large tech companies building advanced data centers that require traditional server chips and CPUs from Intel as well as graphics processors from brands like Nvidia.
Sales at Intel’s personal computer unit likely rose 2.5% to $8.21 billion.
It’s a Long Way to Go
Intel has been steadily losing share of the PC market to AMD and chip blueprint designer Arm, and may now face weaker PC demand as a global memory chip shortage drives up memory chip prices and makes laptops more expensive.
“While data center demand remains bullish, we believe PC demand may decline due to increased memory pricing, given that memory accounts for 25% to 30% of the PC bill of materials,” UBS analysts wrote in a note earlier this month. he said.
The brokerage expects a 4% decline in global 2026 PC shipments, compared to the more than 3% growth it previously forecast.
Intel’s renewed product lineup may help offset some losses.
The company has begun shipping new “Panther Lake” computer chips, the first product manufactured using Intel’s make-or-break 18A manufacturing technology. Previous generations of PC chips were largely manufactured by chip contractor TSMC.
Intel has long been its largest manufacturing customer, but with growing political goodwill the Street is hoping for new foundry customers.
“We really like Lip-Bu Tan, but more importantly, more powerful people like President Trump, Secretary Lutnick, (Nvidia CEO) Jensen Huang, and even (AMD CEO) Lisa Su like him better as a business partner,” Melius Research analysts wrote in a note. he said.
Reuters reported that Nvidia and Broadcom are conducting production tests with Intel, but much remains uncertain because only a small percentage of chips printed through 18A are good enough to be offered to customers.
Intel said its throughput, or the number of good chips per silicon wafer, is increasing monthly.
Pressured by weak returns, Intel’s adjusted gross margin is expected to fall nearly 6 percentage points to 36.5% in the December quarter.
