Intel's Turnaround Efforts Highlighted Amid Rising AI Data Centre Chip Demand
- tech360.tv
- 5 hours ago
- 3 min read
Intel shareholders anticipate improved company results, suggesting a turnaround led by Chief Executive Officer Lip-Bu Tan is progressing. Increased demand for traditional server chips, driven by rapid data centre build-outs, is also contributing to optimism.
Several significant investments orchestrated by Tan have renewed investor interest in the stock. This follows a 2024 crash, which resulted from previous management errors, including a mismanaged artificial intelligence (AI) product strategy that caused substantial competitive setbacks and job losses.
In 2025, Intel’s stock saw an 84% increase, significantly surpassing the 42% rise of the benchmark semiconductor index.
The company is scheduled to report its fourth-quarter results after markets close on Thursday.
A $5 billion investment from Nvidia and $2 billion from SoftBank, alongside the U.S. government's stake in the company, have strengthened Intel's balance sheet. This has provided Tan with the ability to reshape the company’s manufacturing and AI strategy.
Tan has also overhauled the company’s chipmaking operations. He has also streamlined what he described as a bloated management structure.
Ryuta Makino, an analyst at Intel investor Gabelli Funds, stated that people feel the most optimistic about the company in a long time, noting a very favourable near-term dynamic.
Makino added that a significant bull case for Intel is an anticipated at least double-digit price increase for server central processing units (CPUs) in 2026.
At least 10 brokerages have increased their price targets or ratings for Intel over the last two months, signalling higher expectations for the company.
Intel’s data centre business is expected to show an increase of more than 30% to USD 4.43 billion for the quarter ended December, according to LSEG data.
This growth is potentially due to major technology companies developing advanced data centres, which require Intel’s traditional server chips and CPUs, in addition to graphics processors from companies like Nvidia.
Sales in Intel’s personal computer unit likely grew by 2.5% to USD 8.21 billion.
Intel has consistently lost market share in the personal computer (PC) sector to rival AMD and chip blueprint designer Arm.
The company may also face decreased PC demand due to a global memory chip shortage, which has raised memory chip prices and increased laptop costs.
UBS analysts noted that while they remain optimistic about data centre demand, PC demand might moderate due to rising memory pricing. Memory components typically account for 25% to 30% of a PC’s bill of materials, the analysts stated.
The brokerage anticipates a 4% decline in global 2026 PC shipments. This contrasts with its earlier projection of over 3% growth.
Intel’s updated product range might help mitigate some of these losses.
The company has commenced shipping its new Panther Lake PC chips, which are the first products manufactured using Intel’s make-or-break 18A manufacturing technology. Previous generation PC chips were primarily produced by chip contractor TSMC.
Intel has long been its own largest manufacturing customer. However, with its growing political goodwill, the Street is hoping for new foundry clients.
Melius Research analysts stated in a note that they appreciate Tan, adding that influential figures such as President Trump, Secretary Lutnick, Nvidia Chief Executive Officer Jensen Huang, and AMD Chief Executive Officer Lisa Su like him even more as a business partner.
Reuters has reported that Nvidia and Broadcom have conducted manufacturing tests with Intel. However, uncertainty remains as only a small percentage of chips produced using 18A technology have met the quality standards for customer availability.
Intel has stated that its yields, referring to the quantity of usable chips per silicon wafer, are showing monthly improvements.
Due to challenges with low yields, Intel’s adjusted gross margin is projected to have decreased by approximately 6 percentage points, reaching 36.5% in the December quarter.
Intel is seeing increased investor optimism driven by CEO Lip-Bu Tan’s turnaround efforts and strong demand from AI data centre build-outs.
Significant investments totalling USD 7 billion from Nvidia, SoftBank, and the U.S. government have bolstered Intel’s finances and strategic flexibility.
Intel’s data centre business is expected to rise by over 30% to USD 4.43 billion for the December quarter, although PC unit sales growth is modest at 2.5%.
Source: REUTERS
