2025 Could Be Intel’s Year
Next year promises to be an important one for Intel stock (NASDAQ:INTC). Intel is likely to see its bread-and-butter CPU sales pick up with a more compelling portfolio of products and recovery in demand. Meanwhile, the company’s foundry business also faces a moment of truth of sorts, as it looks to commercialize its cutting-edge 18A process. And with Donald Trump back in the White House next year, Intel’s sizable base of U.S. manufacturing could put the company in a unique position of strength, given the pro-American policies of the new administration. Below, we take a look at what to expect from Intel in 2025. See our Intel upside analysis on How Intel Stock Can Surge 3x To $60. On the other hand, see our counter scenario which explores how Intel Stock Could Dive To $10.
The decrease in INTC stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 6% in 2021, -47% in 2022, and 95% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. So what are some of the factors that could help Intel stock rebound?
CPU Recovery Could Be In The Cards
Intel has lost considerable ground in the CPU market in recent years. While rival AMD has been gaining share, the broader pivot to AI accelerators is also hurting demand for the company’s GPUs. However, Intel’s latest lineup looks more promising. The Lunar Lake chip designed for laptops and ultra-compact devices as well as the Arrow Lake chip for desktops, are manufactured by TSMC using its advanced 3nm process. This could give the company a better shot at competing with AMD in the near term.
The broader recovery of the PC market, coupled with stronger products, is likely to help Intel boost Intel revenues in 2024. Moreover, after close to two years of massive investments in AI chip data, companies could begin to boost CPU spending led by general-purpose workloads and server refresh cycles. Intel’s latest server chips, such as the Sierra Forest and Granite Rapids are also expected to compete more favorably with AMD, using the new 3 nanometers “Intel 3” process node. Intel’s revenue guidance for Q4 was also better than expected, with the company projecting sales of between $13.3 billion to $14.3 billion, indicating that we could begin to see some of these trends play out.
18A Process Node Will Move Towards Production
Intel is betting big on its 18A process, which it considers its most advanced yet, to turn around its foundry business. The process produces chips with technologies including RibbonFET gate-all-around transistors and PowerVia backside power delivery, which are expected to boost performance and power efficiency. Intel has secured big contracts with this technology, including with the U.S. Department of Defense for the RAMP-C program, which seeks to bring leading-edge semiconductor technology domestically. Other high-profile customers include Amazon and Microsoft, which intend to design custom chips, including AI accelerators.
Intel announced in early August that it had reached critical milestones with chips made using the 18A process, noting that the chip had powered on, booted operating systems, and was operational within Intel. The company expects external customers to tape out (move from design to foundry for manufacturing) their first 18A designs in 2025, with enterprise-scale production to begin thereafter. If Intel executes this transition effectively, it could shift the narrative around the stock, justifying the significant investments made in its foundry business over the past few years.
President-elect Donald Trump’s emphasis on boosting U.S. manufacturing could work in Intel’s favor, given its sizable domestic fabrication footprint. There’s a possibility that Intel could see considerable regulatory support aimed at boosting domestic chip production. For example, the new administration could look at imposing tariffs that make it more expensive for foreign fabrication companies to produce and export chips to the U.S. A stronger emphasis on domestic production, either through tariffs or via other policies, could drive more business to Intel. Intel’s foundry division – which produces chips for third-party customers – could also see stronger demand, particularly as companies look to rely on U.S. suppliers to avoid potential duties.
Semiconductors are critical for national security – an area that Trump has consistently emphasized – and Intel’s domestic manufacturing might be viewed as contributing to protecting U.S. technological independence. Intel could also see a higher number of contracts awarded to it from the government, being the only American semiconductor player that designs and fabricates leading-edge logic chips in the U.S. This means that the company’s domestic chip supply chain could help it win more contracts under Trump, who boosted military spending over his last term.
An Opportunity In AI Accelerators?
Although Nvidia remains the undisputed leader in the AI market at the moment, with AMD coming in a distant second, Intel is expanding its presence in the AI processor space with its Gaudi 2 and upcoming Gaudi 3 AI accelerators. We believe that this is an opportunity for the likes of Intel to gain some ground. The AI market at large could gradually shift from the process of model training to inferencing, which is the process of generating outputs and answers from trained models. The process of inferencing is less computationally intensive, and it’s possible that these tasks can be handled adequately well by AI processors from the likes of Intel and AMD.
Costs are also becoming a concern for end customers of AI chips. The economics of the AI business remain weak, with heavy investments in GPU chips yielding minimal revenues and there’s a real possibility that from 2025, companies could be a lot more circumspect with their AI spending. Although Gaudi sales have been lackluster, Intel’s newest Gaudi 3 accelerator costs about half as much as Nvidia’s chips, and this could make for a more favorable price-to-performance tradeoff. The shift toward inferencing is a key reason to consider Selling Nvidia, Buying AMD Stock.
Intel stock trades at about $24 per share currently or 25x consensus 2025 earnings, which is reasonable in our view given the above factors. Intel is also expected to return to growth next year with consensus pointing to about 6% revenue expansion. We value Intel stock at about $27 per share, slightly ahead of the current market price. See our analysis of Intel valuation for a closer look at what to expect from Intel.
| Returns | Dec 2024 MTD [1] |
2024 YTD [1] |
2017-24 Total [2] |
| INTC Return | 0% | -52% | 67% |
| S&P 500 Return | 0% | 26% | 169% |
| Trefis Reinforced Value Portfolio | 1% | 25% | 831% |
[1] Returns as of 12/3/2024
[2] Cumulative total returns since the end of 2016
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