American semiconductor giant Intel Corporation (INTC) jumped nearly 20% last week after Bloomberg reported the company had approached Apple (AAPL) for funding to support its turnaround efforts. The strategy is gaining traction, with Intel already securing major backing, including $2 billion from SoftBank and $5 billion from AI chip leader Nvidia (NVDA).
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Notably, Intel can now boast to be partially owned by the U.S. government, following the controversial decision by U.S. authorities to buy a 10% stake in the ailing chipmaker last month.
However, after a substantial ~50% gain since turning bullish on Intel just over a year ago, I am shifting to a Neutral stance. While I see Intel moving in the right strategic direction—focusing on core operations and shedding non-core assets—I believe significant execution risks remain.
Intel’s Funding Search Aligns with Its Growth Objectives
One of the main reasons I believe Intel is moving in the right strategic direction is its pursuit of large-scale investments to support capital expenditures (CapEx) requirements. For 2025, the company projects CapEx of $18 billion. Under the previous management team led by Pat Gelsinger, Intel aggressively pursued an ambitious future as a foundry business.
However, the new CEO, Lip-Bu Tan, is promoting a more careful allocation of capital. During the Q2 earnings call, CEO Tan emphasized the need to secure an external funding partner to invest in the next-generation 14A chip. In its Q2 filing with the SEC, Intel noted that failure to find a funding partner may result in the company being forced to pause its investments in next-gen technologies.
INTC has already raised ~$8 billion this year by completing the second phase of the NAND business sale to SK Hynix, selling a 51% stake in Altera to Silver Lake Partners, and closing a secondary offering for Mobileye Global (MBLY).
Intel’s push for external funding aligns with its ambitious roadmap to reclaim leadership in technology and manufacturing through heavy investment. In the U.S., the company is upgrading facilities in Arizona, New Mexico, and Oregon to strengthen its advanced chip production, while also building a new plant in Ohio.
The rollout of its next-generation 14A node is expected to drive CapEx significantly higher in the near term. Intel has cautioned that without external funding partners, it may be forced to delay or scale back these critical investments.
Intel Moves Quickly to Close the Gap with AMD and Nvidia
Alongside securing significant investments, Intel is doubling down on rebuilding its technological edge and correcting past missteps that allowed competitors, such as Advanced Micro Devices (AMD) and Nvidia, to seize market share. In Q2, the company began producing its first 18A wafers in Arizona and released the 14A Process Design Kit to external customers. Intel reports that its foundry team is now focused on developing production flows and test chips for 14A—evidence of its push to narrow the technology gap with rivals.
Under its new CEO, Intel is also undergoing a sweeping cultural transformation aimed at improving efficiency. Management layers have been reduced by 50%, and all major new chip designs now require direct approval from the CEO. These changes are designed to create a leaner, more agile organization that can accelerate its technology investments.
INTC Expands Spending in AI, GPUs, and Edge Computing
Intel is taking a holistic approach to innovation, investing not only in processor performance but across its entire technology stack. A key focus is advanced packaging, which is critical for designing next-generation AI chips. In Q2, the company announced a partnership with Amkor (AMCR), underscoring its commitment to strengthening capabilities in this area. These strategic investments are designed to close the competitive gap with rivals over the long term.
Notably, Intel’s investments span all core businesses. The first batch of Panther Lake SKUs remains on track to ship by year-end. The Client Computing Group is expanding its GPU portfolio, including the introduction of Arc GPUs for AI workloads. To address rising demand in edge computing, Intel has also made its Open Edge Platform available to developers—an encouraging move to grow adoption and deepen engagement within the Intel ecosystem.
Is Intel a Buy or Sell?
On Wall Street, INTC stock carries a Hold consensus rating based on two Buy, 27 Hold, and four Sell ratings over the past three months. It’s fair to say Wall Street is firmly on the fence with INTC and is waiting for the multitude of relevant factors to play out accordingly. INTC’s average stock price target of $26.41 implies approximately 26% downside potential over the next twelve months.
After a stellar run in the market, I also believe Intel stock offers little upside from here unless the company beats its guidance for the launch of 18A and 14A processors. Given the significant execution risk facing the company and the intensifying competition in the semiconductor sector, I believe the risk-reward profile of investing in Intel is not skewed in favor of investors today.
Intel Looks Fairly Valued Despite Strategic Advances
Intel is taking the proper steps—investing in technology, advancing chip design, and streamlining operations by prioritizing core businesses while monetizing non-core assets. That said, I believe the market has already priced in much of this progress, leaving the stock fairly valued at current levels. For this reason, I am moving to a Neutral stance. I will, however, continue to monitor the company’s technology investments closely to assess their potential impact on future earnings growth.