A leading Wall Street analyst downgraded Intel to Sell after Q4 results revealed a continued loss of turnaround momentum. The call reflects growing concern that the company’s ambitious recovery plan has faltered, especially as investors had largely priced in a rebound that has yet to materialize. The downgrade follows a sharp expansion in valuation multiples over the past year despite weakening fundamentals.

In its latest quarter, Intel reported revenue of $13.67 billion, down 4% year-over-year, driven by softer PC demand and inventory adjustments at key OEM customers. Gross margins contracted by nearly 150 basis points as production costs rose and legacy process nodes weighed on profitability. Management’s guidance for the current quarter calls for low-single-digit revenue growth but flagging margins, signaling that the recovery remains fragile.

At the recent Cisco AI Summit, CEO Lip-Bu Tan announced that Intel will enter the graphics processing unit market, targeting AI training and high-performance computing workloads long dominated by a single rival. The project is led by data center executive Kevork Kechichian and veteran chip architect Eric Demmers, both tasked with aligning product development to customer requirements. This marks a significant expansion beyond Intel’s traditional CPU focus and underscores the company’s effort to capture a slice of the rapidly growing AI accelerator market.

While Intel’s foundry segment has drawn renewed investor interest—bolstered by U.S. government incentives and partnerships—the business still lacks a marquee external customer to anchor capacity utilization. Recent production snags during the ramp of new process nodes have contributed to supply constraints and weighed on near-term guidance. Investors will be watching for evidence of improved yield rates and new contract announcements to validate the long-term growth thesis.