Intel tumbles as pleas for time to deliver its turnaround fall on deaf ears

Intel is tumbling after asking for patience to execute a turnaround plan that traders had already aggressively been pricing in.

The US chipmaker delivered stronger-than-expected Q4 results, but dropped after its Q1 guidance came in light of Wall Street estimates. Shares extended declines during Intel’s conference call to trade down 13% as of 7:30 a.m. ET.

“We are on a multiyear journey,” said Intel CEO Lip-Bu Tan, which will “take time and resolve.”

That time and resolve is something that long-term investors might have the stomach for, though the same can’t be said of the hot money that’s recently poured into Intel, some of which seems to be on its way out. Had January ended yesterday, Intel would have enjoyed its second-best month of all time (behind October 1987).

“For a stock up 47% in three weeks (mostly on vibes and tweets) the print had to be perfect; it was not,” Bernstein analyst Stacy Rasgon wrote. “And while the things driving investors crazy (server refresh hopes, 18A ramp, potential for 14A customers etc) are still there in theory, it appears Intel’s hips do, in fact, lie. Yes the server cycle seems real, but the company appears to have woefully misjudged it with their capacity footprint caught massively off-guard.”

Intel wasn’t able to offer concrete progress on any new customer wins. For the chipmaker’s 14A advanced manufacturing process, the CEO said, “We believe customers will begin to make firm supplier decisions starting in the second half of this year and extending into the first half of 2027.”

Management attributed the soft Q1 outlook to supply constraints, which it expects will be the biggest headache in the current quarter and will turn a corner thereafter.

During the call, Bernstein’s Rasgon questioned whether this issue wasn’t self-inflicted, particularly when it comes to data center customers.

“You guys have your own factories — why are you in the inventory situation that you’re in?” he asked on the conference call. “You have $11.6 billion of inventory, and yet it’s not in the right place at the right time to ship. How does that happen?

Intel upped its outlook for 2026 capex to “flat to down slightly” from “down,” as the chipmaker aims to boost capacity to be able to meet robust demand.

Even with the post-earnings tumble, the stock remains an exceptional performer over the past month and year.

But while the recent price action suggested Intel’s turnaround was a fait accompli, the story from management and Wall Street is that it’s far from a foregone conclusion.

“Foundry economics/scale will likely remain challenged at least through the end of the decade,” wrote JPMorgan analyst Harlan Sur. “In sum, we still view Intel as being at risk of further share loss in its product businesses (particularly in server CPU given AMD’s strong product portfolio/roadmap and Intel’s supply constraints), with a largely unproven external Foundry business that (so far) has seen very limited traction with customers.”