Intel suffered its worst trading day since August 2024, plunging 17% despite reporting quarterly earnings that exceeded Wall Street expectations. The semiconductor giant's stock collapse signals that investors have lost confidence in the company's ability to execute its ambitious manufacturing turnaround.
The numbers don't lie, but executives sometimes do. In this case, Intel's Q4 2025 earnings technically beat analyst estimates, but the guidance and manufacturing commentary told the real story: the company is hemorrhaging money on its foundry ambitions while competitors race ahead.
The sell-off erased roughly $30 billion in market capitalization in a single session, bringing Intel's stock to levels not seen since early 2023. While management touted progress on its process technology roadmap, Wall Street wasn't buying it.
Manufacturing Mess Overshadows Beat
Intel's foundry services division, the centerpiece of CEO Pat Gelsinger's strategy to compete with Taiwan's TSMC, continues to bleed cash. The company disclosed that foundry losses are accelerating, with operating margins deeply negative as Intel struggles to win external customers for its chip-making services.
The contrast with TSMC couldn't be starker. While the Taiwanese manufacturer commands premium pricing and operates at healthy margins, Intel is offering aggressive discounts to attract customers, essentially subsidizing production to gain market share it may never achieve.
Investors are also questioning Intel's capital allocation. The company has committed over $100 billion to new fabrication facilities across the United States and Europe, banking on government subsidies and a reshoring of semiconductor production that may not materialize at the scale Intel needs to justify the investment.
The CHIPS Act Gamble
Intel has positioned itself as the primary beneficiary of the U.S. CHIPS Act, which allocated tens of billions in subsidies for domestic semiconductor manufacturing. But those subsidies come with strings attached, and Intel's execution challenges are raising doubts about whether taxpayer money is being deployed wisely.
Competitors like Samsung and TSMC are also building U.S. facilities with government support, but they're doing so from positions of technological and financial strength. Intel, by contrast, is trying to fix its manufacturing process while simultaneously scaling it, a high-wire act that grows riskier by the quarter.
The company's product roadmap also faces headwinds. Advanced Micro Devices continues to gain share in both data center and consumer markets, while Nvidia has captured the AI accelerator market that represents the industry's primary growth engine.
Cui Bono?
Who benefits from Intel's struggles? Clearly TSMC, which continues to dominate leading-edge chip production. Also AMD, which relies on TSMC's manufacturing and is eating Intel's lunch in servers. And Nvidia, which has turned the GPU into the data center's most critical component, relegating the CPU to supporting player status.
Intel bulls argue the stock is cheap after the decline, trading at a significant discount to book value. But value investors should ask: what is a foundry business worth if it can't compete on technology or economics?
The company faces a brutal reality. It must simultaneously fix its manufacturing process, compete with TSMC for external foundry customers, defend its x86 franchise against AMD, and find a role in the AI revolution it's largely missed. That's a lot of problems for one turnaround story.
Until Intel demonstrates it can manufacture chips at the quality, cost, and scale of TSMC, this stock remains a show-me situation. And judging by Friday's sell-off, the market has stopped taking management's word for it.
