After a 17% pullback from its mid-January peak, Intel’s shares remain unchanged from levels reached in early February despite trading 130% above their August 2025 low. The Q1 FY2026 outlook disappointed, with management guiding revenue of $11.7–$12.7 billion versus consensus near $12.6 billion and forecasting flat non-GAAP EPS, marking year-over-year declines in both sales and gross margin. Supply constraints, particularly in advanced-node wafer output, were cited as the principal culprit, though Intel expects production to normalize in 2Q. On the positive side, data-center AI (DCAI) revenue grew 15% sequentially in 4Q FY2025, underscoring strong enterprise demand for Xeon processors and related accelerators. Despite the long-term AI opportunity, the near-term rebound is expected to be bumpy, and investors are advised to maintain a Hold stance until supply headwinds ease and margin recovery becomes evident.

Intel’s custom ASIC division surged 50% in 2025 to exceed a $1 billion annualized revenue run rate, driven primarily by networking-AI chip demand. In September 2025 the company launched a dedicated Central Engineering Group, led by former Cadence veteran Srini Iyengar, to formalize external chip-design services. With a total addressable market estimated at $100 billion and a current share below 1%, Intel offers a unique one-stop shop—combining proprietary IP, design tools, and in-house foundry capacity—that rivals Broadcom and Marvell cannot match. Notable wins include custom 5G SoCs for Ericsson on Intel 18A and AI fabric accelerators for Amazon Web Services. Beyond immediate revenue, this business is expected to funnel new customers into Intel’s foundry pipeline—critical as the company ramps its Intel 14A process in 2027—potentially evolving into a multibillion-dollar segment and strengthening Intel’s overall turnaround thesis.