Intel’s (INTC) Execution Crisis Goes from Bad to Worse

Intel’s (INTC) turnaround efforts suffered a major setback last week following its Q2 2025 earnings report. While revenue came in at almost $13 billion—essentially flat year-over-year and slightly above analyst expectations—the company’s profitability sharply declined. The news pushed INTC more than 10% lower with a quick bounce clearly off the table.

Intel reported a net loss of $2.9 billion, and even on a non-GAAP basis, it posted a $400 million loss, a significant drop from last year’s $100 million profit in the same quarter. In my view, the combination of stagnant revenue and deteriorating margins signals deeper structural issues, leading me to maintain a Bearish stance on INTC stock.

Intel’s ‘Kitchen-Sink’ Quarter

Intel’s significant GAAP loss in Q2 stemmed from nearly $3 billion in charges. These included $1.9 billion in restructuring costs related to corporate downsizing and workforce reductions, $800 million in non-cash impairment and accelerated depreciation tied to underutilized assets, and $200 million in one-time expenses.

Notably, the $800 million in asset write-downs was publicly criticized by incoming CEO Lip-Bu Tan as the result of “unwise and excessive” capital investments. Intel’s failure to anticipate these charges in Q1 raises concerns about internal oversight and planning. From my perspective, this appears to be a classic “kitchen-sink” quarter—where new leadership clears the slate by front-loading bad news to reset expectations moving forward.

Intel Slashes Its Workforce

In the wake of its disappointing Q2 results, Intel unveiled a sweeping workforce reduction plan, aiming to cut headcount by roughly 15%. A significant portion of these layoffs will target middle management, indicating that organizational bloat and bureaucratic inertia may have hindered efficiency. The company plans to initiate a cultural reset—focused on greater accountability and cross-functional collaboration—starting in September. According to TipRanks data, INTC’s operating expenses rose sharply during the last quarter.

At the same time, Intel is scaling back its ambitious global fab expansion. Its high-profile, multi-billion-dollar projects in Germany and Poland have been scrapped entirely, while the $28 billion chip facility in Ohio is being delayed to better reflect current market demand. Although these decisions are expected to generate substantial cost savings, they also raise questions about Intel’s long-term strategic positioning in a rapidly evolving semiconductor landscape.

The AI Race Leaves INTC Lagging

These sweeping changes raise a critical question: if Intel’s previous multi-year strategy was so deeply flawed that it demanded such a dramatic and public course correction, what assurance does the market have that the new plan is any more viable? The simple answer is: very little.

Intel appears to be rapidly losing ground to its competitors. Its Data Center and AI segment grew just 4% year-over-year to $3.9 billion. In stark contrast, Nvidia (NVDA) recently reported $44 billion in quarterly data center revenue—an explosive 73% increase. Even Intel’s closest peer, Advanced Micro Devices (AMD), is expected to post $7.41 billion in total revenue, up 27% year-over-year, fueled by strong demand for its MI355X AI GPUs.

INTC’s High-Stakes Foundry Ultimatum

Context matters. Intel’s legacy Client Computing Group—largely driven by its PC business—continues to struggle, with revenue declining 3% year-over-year to $7.9 billion amid intensifying competition. Meanwhile, the Intel Foundry segment, once positioned as the cornerstone of its turnaround strategy, delivered just 3% year-over-year growth, with profitability still far on the horizon.

More concerning is Intel’s decision to pause full-scale development and production of its next-generation 14A process node without first securing a major customer. This move carries serious long-term risk: without a committed partner, billions in manufacturing equipment could remain idle and face future write-downs.

To be fair, much of this uncertainty appears priced into the stock. Intel’s market cap remains below $100 billion, well behind its peers, and INTC’s EV/Sales ratio of 2.4 reflects a 32% discount to the broader IT sector. Still, given the company’s stagnating growth and ongoing inability to turn a profit, this discount may be justified.

Is INTC a Buy, Sell, or Hold?

On Wall Street, INTC sports a Hold consensus rating based on one Buy, 25 Hold, and three Sell ratings in the past three months. INTC’s average stock price target of $22.25 implies a 7.6% upside potential over the next 12 months. 

See more INTC analyst ratings

Last week, Morgan Stanley analyst Joseph Moore reiterated a Hold rating on INTC with a price target of $23. The analyst expressed caution, noting that a primary concern is “Intel’s foundry strategy, particularly the development of the 14A process, which is contingent on securing a major foundry customer. This situation leaves Intel in a precarious position, as it is not fully committed to the foundry business, creating uncertainty about its future direction.”

There’s Little Value in Waiting for INTC’s Turnaround

Intel’s Q2 results provided explicit confirmation of an execution crisis that has been building for years. The company’s abrupt shift toward downsizing—while likely essential for survival—raises concerns about its ability to remain technologically competitive over the long term. The added uncertainty surrounding its 14A node, now tied to a high-stakes, go-it-alone strategy, only deepens skepticism around Intel’s turnaround potential and renders the investment case increasingly difficult to justify.

However, despite the gloom, INTC does have options and potential exit from its market doldrums. If next-gen products like the Panther Lake CPU can recapture market share and ongoing cost-cutting efforts succeed in restoring margins, Intel could emerge from this restructuring phase leaner and more focused. But from where I sit, without sustained, measurable progress, this remains a story best watched from the sidelines, while seeking short positions to profit from the gloom.