Focus: Q4 2025 Earnings Reports of U.S. Stocks
Over the past five months, Intel's stock price has more than doubled since U.S. President Donald Trump announced the U.S. government would acquire a 10% stake in the struggling chipmaker, followed by similar investments from SoftBank and Nvidia. Investors are betting that this fresh capital injection, combined with a surge in artificial intelligence demand, will help revitalize the company. Intel is set to release its fourth-quarter earnings later this afternoon, which will put these market expectations to a reality test. The results may determine whether the stock's rally can continue. Skeptics argue that the stock has risen too far, too fast, and if its 2026 outlook disappoints, the shares could face a significant sell-off in Friday's early trading. Key Points
Intel's current stock valuation now exceeds that of TSMC. Intel's revenue continues to decline, having missed out on the AI chip boom that is fueling TSMC's growth. Analysts question Intel's high valuation, citing execution risks and its heavy reliance on the PC market.
Paul Meeks, Head of Technology Research at Free Capital Markets, stated, "The pre-earnings stock surge, and indeed Intel's massive run-up over the past year, is completely disconnected from the company's actual fundamentals—even its expected fundamentals." For most of 2024 and 2025, Intel's stock traded at a lower price-to-earnings ratio based on expected EBITDA compared to TSMC, the global leader in chip manufacturing. However, as its stock continued to climb, Intel's forward EBITDA multiple has now risen to 20 times, the highest level since 2021, significantly exceeding TSMC's current multiple of 12.5 times. Based on next year's estimated sales, Intel's valuation is also at its highest point in at least a decade. "Going into the earnings call, I'm a little nervous," said Ryota Maki, an analyst at Gabelli Funds, which holds a small position in Intel. "I'm not a hardcore Intel bear, but I think the stock has gotten ahead of itself and the valuation is rich." A comparison between TSMC and Intel yields a clear conclusion. In 2025, TSMC's revenue grew 35.9% year-over-year and is projected to grow nearly 30% in 2026. In contrast, Intel's revenue has been declining for several years, and it missed the AI chip boom—a surge that has not only driven TSMC's growth but also catapulted Nvidia's revenue. According to S&P Global Market Intelligence, analysts expect Intel's Q4 revenue to decline by 6.1%, a figure within the midpoint of the company's own guidance. If the results meet expectations, Intel's full-year 2025 revenue will be slightly below its 2024 level. Analysts also project only a 2.8% revenue increase for the company in 2026. Intel's revenue remains heavily dependent on the desktop computer chip market, a business that has been its core pillar for decades. In the third quarter of last year, Intel reported revenue of $13.7 billion, with approximately 62% coming from the sale of central processing units (CPUs) and related products for personal computers and other consumer devices. During that quarter, revenue from AI data center servers and processors was $4.1 billion, down $24 million year-over-year. Almost all of the remaining revenue came from its nascent foundry business—manufacturing chips for other companies—a market long dominated by TSMC, where Intel has yet to make significant inroads. Despite Intel's weak performance in both the AI data center chip and foundry markets, investors remain optimistic about its potential in these areas. This is partly because President Trump has consistently emphasized the importance of producing advanced AI chips domestically in the U.S. Bullish investors point to a geopolitical factor that could elevate Intel's strategic importance: if China were to gain control of Taiwan, the global market would lose access to TSMC's chip production capacity on the island. The problem, however, is that there is no way for investors to realistically estimate the probability of such an event occurring. Meeks is skeptical of this argument, stating, "The idea that Intel could become the American version of TSMC is incredibly naive." He added, "It's not a demand issue; there's no lack of demand right now. Intel's problem is on the supply side, and until I see them fix that, I remain doubtful. Meanwhile, assigning such a high valuation based on the assumption that everything will go smoothly carries significant risk." Even analysts who believe Intel's stock is overvalued acknowledge that the company has the potential to increase sales of its AI data center chips in 2026. For example, Maki projects mid-single-digit revenue growth for Intel in 2026, primarily driven by double-digit growth in sales of server CPUs for AI clients—a segment that currently accounts for less than one-third of total revenue. He notes that the rise of AI agents is significantly boosting demand for server CPUs, and increased procurement by cloud service providers could support price increases for Intel's products. Maki also stated that another reason for investor optimism is the expectation that Intel could gain market share from its main server CPU competitor, Advanced Micro Devices (AMD). This expectation is based on Intel's new manufacturing process, called 18A, which could potentially give Intel a self-manufacturing advantage over AMD. AMD outsources all its CPU production to TSMC, whose capacity cannot fully meet the demands of AMD's customers. However, Maki concedes that whether Intel can actually take share from AMD "largely depends on whether 18A yields exceed expectations"—yield being the percentage of usable chips produced. It is still too early to judge the yield levels of this new process. Intel only just launched its first AI chip built using the 18A process earlier this month. Furthermore, soaring memory chip prices could dampen consumer demand for PCs, negatively impacting Intel's largest revenue segment: desktop computer chips. Another major unknown is whether Intel can attract more external customers for its foundry services. "If Intel's technology were truly superior to TSMC's, they should already have a large number of external foundry customers," Maki said. Nevertheless, he remains optimistic about the technology Intel is currently developing and anticipates the company will announce a partnership with Apple—following rumors of talks—where Intel would manufacture some lower-end chips for Apple. Even so, the market appears to have already priced in the expectation that "Intel's foundry business will secure a major client and be able to meet its demands" into the current stock price. Meeks commented, "In an environment of high demand and short supply, securing customers isn't the hard part; every company desperately needs foundry capacity. The question is, can Intel deliver? Their execution track record over the past 20 years or so has been less than stellar."
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