Intel's Price Spikes: Noise, or the First Notes of a Turnaround?

Key Points

• Major customer commitments and new supercomputer design wins provide tangible validation for Intel’s advanced manufacturing and current product offerings.
• A new internal mandate prioritizing product profitability signals a significant strategic shift toward building a more financially resilient business model.
• The stock’s positive reactions to foundational progress suggest an emerging trend where strategic execution is becoming a primary driver of valuation.

Intel Corporation NASDAQ: INTC has given investors a front-row seat to a market in conflict. The stock demonstrated significant volatility during the second week of June, surging nearly 8% on Tuesday before retreating by more than 6% on Wednesday, followed by another attempted rally during the trading day on Thursday. This sharp back-and-forth reflects a deep division in investor sentiment.

On one hand, there is growing optimism fueled by tangible signs of a strategic turnaround. On the other hand, persistent concerns about competition and execution risks remain. While the stock's performance over the past five years has been challenging, the increasing frequency of positive catalysts suggests that the narrative may be shifting from one of decline to one of potential recovery.

From Strategy to Reality: Key Wins Underscore Intel's Progress

Intel is beginning to deliver concrete proof points that validate its direction, reassuring investors of its progress. A cornerstone of this progress is the finalization of a commitment from Microsoft NASDAQ: MSFT to use Intel’s advanced 18A manufacturing process for a future chip.

This endorsement of Intel Foundry’s ambitions to become a leading-edge contract chip manufacturer by a major cloud company like Microsoft is a powerful validation of Intel's strategic direction. This single deal provides a more straightforward path to long-term revenue for a business unit central to Intel's future, instilling confidence in the company's strategic trajectory.

Simultaneously, Intel’s current products are securing key placements. This week, the new Xeon 6 processors were chosen to power a new supercomputer at Imperial College London, proving their competitiveness in demanding scientific and artificial intelligence (AI) research.

Further expanding its ecosystem, Intel also enlisted national security technology firm Draper into its Chiplet Alliance, strengthening its strategic position in the high-value U.S. government and aerospace sectors. Together, these wins demonstrate recent and continued momentum across Intel's product and foundry businesses.

Fixing the Financials: How Intel Is Hard-Wiring Profit Into Its Plans

Intel's most critical internal shift is a renewed focus on financial discipline, a strategic move that should instill investor confidence and trust in the company's leadership. Intel's leadership has announced a new mandate: future products, such as the upcoming Panther Lake CPUs, are being designed to achieve gross margins above 50% before production begins.

This addresses investor concerns about profitability, as highlighted by the company’s recent negative net margins. This profits-first approach, a hallmark of CEO Lip-Bu Tan’s leadership, signals a strategic pivot from simply chasing market share to building a sustainably profitable business.

A company-wide efficiency drive supports this new standard. Intel is pursuing aggressive cost-cutting measures, with a goal to lower non-GAAP operating expenses to approximately $17 billion in 2025 and $16 billion in 2026. For investors, this dual focus on higher-margin products and lower costs provides a clear and logical path toward improved earnings per share (EPS).

Weighing Intel’s Progress Against Persistent Risks

Despite this progress, significant challenges explain the market's cautious stance. The competitive landscape remains fierce, with rivals like AMD NASDAQ: AMD and Nvidia NASDAQ: NVDA continuing to pressure Intel in the data center and AI markets. Execution risk is also a concern, highlighted by reports of potential logistical delays. These operational hurdles are reminders of the immense complexity of Intel’s manufacturing expansion.

Finally, the end of an era was marked by Apple’s NASDAQ: AAPL latest macOS update, which officially concludes support for Intel-based Macs. While expected, this closes the door on a historic partnership and underscores the necessity for Intel to succeed in its new strategic direction. This collection of headwinds is reflected in the consensus Reduce rating from Intel’s analyst community, who remain watchful of the company’s ability to navigate these obstacles.

While these headwinds are acknowledged and already priced into the stock's current valuation, this perspective may overlook the strategic counterweights Intel is actively deploying.

Though real, Intel's unique advantage of scale and its IDM 2.0 strategy are meeting the competitive threat from rivals. The strategy leverages a U.S.-centric manufacturing footprint supported by CHIPS Act funding to offer a secure and increasingly cost-effective alternative. 

Furthermore, operational hurdles and the long-anticipated conclusion of the Apple partnership are known variables; the latter has sharpened Intel's focus on the broader PC ecosystem, thereby fostering innovation in areas such as the AI PC market.

Consequently, the cautious consensus from analysts, which is largely reflective of past performance, may not fully account for the forward-looking impact of new foundry commitments and a strict internal focus on profitability, presenting a potential opportunity for investors who are valuing the company on its future trajectory rather than its recent history.

Intel’s Emerging Upward Trajectory

The story of Intel's stock is currently one of tension. Tangible progress is now creating enough force to drive significant, positive price swings, a distinct change from the recent past.

While market apprehension and real-world challenges can pull the stock back, the underlying foundation for a recovery is strengthening with each new win and each step toward greater profitability.

For long-term investors, the recent volatility may be more than just market noise. It could be the early rhythm of a turnaround gaining traction. As Intel continues to execute its strategy, with the next major catalyst being volume manufacturing on its 18A process, anticipated later in 2025, these upward movements may become more resilient.

As a bonus, the current dividend yield of approximately 2.4% offers a modest return for investors who recognize the pattern in the volatility and are willing to wait for the company's long-term strategy to materialize fully.