Intel reports earnings on Thursday and top-line revenue results might not be much of an indicator of the confused long-term state of the American icon.
Weighing on Intel are major concerns about its future in the AI market, how much it can cut jobs for cost savings and critically: how well its IFS unit is doing in attracting foundry customers, even as Intel reportedly wants to move them to the 14A process node and away from 18A.
Some financial analysts are predicting that cost-cutting efforts of late, including reported layoffs, and the potential recovery of the PC market could encourage financial markets in what’s known as a short squeeze. The current 12-month price target by a majority analysts is $22.13, below the trading price of $23.10 before Monday’s open.
Intel stock has been on a 14% climb since the start of 2025 and is up by nearly 12% from the day Lip Bu Tan started as CEO on March 12, when the price was $20.68.
Could Intel reach 21,000 layoffs this year?
Investors love hearing about cost-cutting, even as the impact is devastating to employees. In April, the company announced plans to cut its global workforce by up to 20%, which could amount to 21,000 workers. Intel corporate public relations has not commented on recent reported numbers of layoffs, mainly hitting California and Oregon in the US.
In a statement on July 8, Intel told Fierce that the company was “removing organization complexity and empowering our engineers…to better serve the needs of our customers and strengthen our execution.”
To be fair, Intel is not the only tech company laying off employees. Layoffs.fyi has tracked 80,000 layoffs at 163 companies and at least part of that total is due to greater spending on AI inside companies.
Tan offered a bleak assessment of its ranking as a semiconductor company
Ironically, Intel’s layoffs are partly to adjust for years of failing to embrace AI fully, at least with the advancement of chips to support massive AI training and inference compute needs. Nvidia has the lead far and away in the GPU space, with AMD the main contender.
Intel in February decided not to commercially release Falcon Shores, an AI processor meant to compete directly with Nvidia. It will use Falcon Shores as an internal test chip instead to help develop Jaguar Shores for a more complete AI data center solution.
More recently, Tan reportedly said: “Twenty, 30 years ago, we were really the leader. Now I think the world has changed. We are not in the top 10 semiconductor companies.” His comments were reported by Oregon Tech and Tom’s Hardware among others.
Tan wisely sees the Intel recovery as a marathon effort, and also reportedly has said “On [AI] training, I think it is too late for us.” He believes agentic AI is a key growth area, however.
Critical questions about IFS and moves to 14A
When Tan first arrived as CEO, rumors were spreading that Intel would be split in two, with its foundry arm IFS split off as a separate unit. But Tan dispelled that thinking, even as the losses for IFS have become a major burden for the company. In the first quarter of 2025, the loss was $2.3 billion for IFS, flat sequentially. The losses are attributed to structural cost pressures but also to the costs of ramping up Intel 18A technology, which was expected at one point to last until 2030.
“The biggest takeaway from second quarter earnings on Thursday should be more visibility into how IFS is doing. Are they cutting the losses? Have they signed any new customers?” said Jack Gold, principal analyst at J. Gold Associates. “And, are they really moving all external customers to 14A and away from 18A? This will have a significant impact on the longer term health of Intel.”
Reuters reported on July 2 that Tan was considering a shift to potentially abandon the 18A node for external customers in favor of focusing on next-gen 14A (1.4nm), currently set to arrive in 2027. The move is apparently meant to attract Apple and Nvidia, currently customers of TSMC, but Intel has not commented publicly.
Also, analysts are also looking at the broader picture, including how the PC and datacenter businesses are doing for Intel.
“It will be interesting to hear how Tan is thinking about the future of Intel and what he thinks about whether there will be more downsizing or divestitures,” Gold added. “It should be an interesting earnings.”
IDC’s Mario Morales told Fierce he expects to see a gradual improvement in Intel’s core business with an overall industry increase in hardware infrastructure investment. “Intel is still missing out on the AI accelerator growth without having a GPU, but there is some benefit from AI server demand” and Intel’s ability to sell into the x86 CPU market for servers.
He also wondered how Intel will do with 18A. “There isn’t any real traction,” he noted.
“The layoffs are unfortunate,” he added, yet Intel still has more headcount than TSMC and AMD combined. “Ultimately, being able to take advantage of cost savings is the end goal. It’s not clear at this point if the savings will support the investment levels needed to remain relevant across the customer base but Intel needed to take drastic actions to bring about a turnaround.“
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