Intel Q4 2025 –No Light in the Tunnel

Intel looks like it is doing a Lucent.

• Intel’s inability to make money and grow revenues in the best environment for semiconductors in a generation is deeply concerning, especially when the company remains under siege on all fronts.
• Intel reported good Q4 25 results but guided badly despite one of the strongest demand environments I have ever seen, which reminds me of Lucent’s inability to make money or grow revenues during the Internet boom.
• Q4 25 revenues / EPS were $13.67bn / $0.15, nicely ahead of consensus at $13.44bn / $0.08, but guidance missed badly.
• The market was assuming that AI demand that has filtered into the compute and storage part of the data centre market would lift demand for x86 CPUs, but Intel has not been able to execute on the opportunity.
• This is why guidance was weak with revenues / gross margins of $11.7bn – $12.7bn / 34.5% significantly worse than forecasts of $12.6bn.
• Gross Margins will remain in a downward trend and lower than both Q4 2025 (36.1%) and Q4 24 (39.2%).
• Intel had all sorts of excuses ready as to why it has failed to execute, and while some of them are credible, I can’t help being reminded of Lucent.
• During the Internet Bubble of 1999 and 2000, companies that made communication equipment barely had to get out of bed to register excellent growth and earn fat margins.
• Everyone that is except Lucent, which was the worst-run company I have ever seen in my career.
• During this period of unlimited demand, Lucent lost money and was restructuring and ended up being acquired by Alcatel in one of the most agonising and badly executed mergers I have ever witnessed.
• I don’t think that Intel is as bad as this, but the current environment is one of the best for semiconductors in over 20 years, and everyone except Intel is doing well and making money.
• This just makes me very nervous with regard to the turnaround plan, which feels like a fudge and does nothing to address the strategic bind in which Intel finds itself.
• Here, with every quarter that passes, the x86 processor, which Intel relies on, looks more and more obsolete, and with Nvidia as an investor, I suspect that its AI accelerator ambitions and GPU business will end up being closed down as Nvidia’s products are better and more popular.
• Intel’s data centre business is at risk from Arm-powered offerings, Intel missed the AI and mobile mega-trends, and its client business is also under threat from Qualcomm and AMD, who I would not be surprised to see make an Arm-powered PC chip sometime soon.
• Against this backdrop, Mr Tan is doing what he can, but I think the current is too strong for him to swim against despite his many talents.
• Consequently, there is virtually no price that would entice me to buy the shares, and while the factories are likely to make chips, I am not convinced that they will have an Intel badge on them.