2025 was a busy year for Intel (INTC), but it didn't necessarily alter its story. The US government, Nvidia (NVDA), and SoftBank (SFTBY) have made significant investments in the legendary American chipmaker, which also appointed a new CEO.
Ahead of advances for the "Magnificent Seven" Big Tech stocks and Intel rival Advanced Micro Devices (AMD), these factors helped propel the stock up 86% for the year.
However, Intel's vital manufacturing division still lacks a significant external client, which is necessary for the cash-losing company to be profitable.
MorningStar analyst Brian Colello told Yahoo Finance, "Intel is ending the year with some optimism that they will be a relevant chip manufacturer in the US at some point in time and that was definitely an uncertain statement at the beginning of the year." He said, "There wasn't the massive sort of deal that really establishes Intel, either, in manufacturing."
The digital revolution and Silicon Valley's standing as a global center of innovation are primarily due to the company's technology: Intel created the first microprocessors, or computer chips, and the x86 architecture, a crucial blueprint for chip design.
For over 50 years, the semiconductor industry's rate of innovation was determined by Moore's Law, which was developed by its co-founder Gordon Moore.
Despite the rest of the industry going "fabless" and outsourcing manufacturing to companies like Taiwan's TSMC (TSM), the corporation has persisted in producing its own computer chips.
However, years of mistakes and bad investment choices caused Intel's manufacturing division to lag behind TSMC, which in turn made its products less competitive.
Due to rivals AMD and Arm (ARM) gaining market share of its chips, which include CPUs for servers, laptops, and desktop computers, its manufacturing operation has lost the scale necessary to stay profitable.
Investors fled after former CEO Pat Gelsinger's four-year ambitious turnaround drive to revitalize Intel's manufacturing division by exposing it to outside clients. Wall Street was alarmed by the enormous amount of money needed to restart the foundry and its uncertain performance.
After Gelsinger was fired by the board in late 2024, Lip-Bu Tan took over as CEO in March, which started to rekindle optimism about the company's potential recovery.
According to analysts, investors have praised Tan's serious demeanor, cost-cutting initiatives, and extensive industry ties, even if Intel's strategy is largely unaltered under him.
After Tan's disagreement with President Trump over the CEO's commercial connections to China, the US government made an unusual $9 billion investment in the corporation, even though Intel was already due to get cash via the Biden-era CHIPS Act. This investment turned Tan's muted faith into confidence.
Since the epidemic brought attention to the dangers of a tech supply chain dependent on Taiwan, the US government has focused on onshoring semiconductor manufacturing. The sense of urgency has been heightened by rising tensions with China, especially the possibility of an invasion of Taiwan.
According to Technalysis analyst Bob O'Donnell, "semiconductors are not only economically important, they're actually important from a national security perspective," he told Yahoo Finance. "Intel has by far the largest infrastructure in place as a true, real American company."
The Intel investment is one example of the US's broader shift toward state capitalism under Trump, which many critics feel poses concerns about national security and the competing interests of the government.
However, experts believe that the US government's 10% ownership of Intel might have a number of beneficial effects for the business, including giving Intel a voice in trade regulations that impact semiconductors.
More significantly, the US might intervene to encourage or compel a large corporation like Apple to employ the chipmaker's foundry.
Investor confidence in Intel shares was further enhanced by a $2 billion investment from SoftBank and a $5 billion investment from Nvidia.
As the business looks for a way forward, the financial infusion helped slow down its sharp losses. Interestingly, though, there was no agreement for Intel's foundry division to produce the AI behemoth's chips as part of the Nvidia transaction.
