Intel reported its Q4 earnings on January 22. The guidance provided by the company for Q1 disappointed investors, and the stock took a tumble on the following day, closing at $45.07, or 17.03% lower, according to Yahoo Finance.

During the earnings call, Lip-Bu Tan, CEO of Intel, addressed the important issue of yields for Intel’s 18A manufacturing process (node).

“My team and I are working tirelessly to drive efficiency and more output from our fabs. While yields are in line with our internal plans, they are still below what I want them to be. Accelerating yield improvement will be an important lever in 2026 as we look to better support our customers.”

The fact that Intel did not give an exact percentage for the yields during the report calls that information into question. This is even after KeyBanc analyst John Vinh wrote that Intel’s foundry reached yield rates of more than 60%, according to Wall St Engine’s post on X, formerly Twitter.

While 60% yields wouldn’t be great, they wouldn’t be in the “we’d rather not say” territory either, which leads me to think they are still below 60%.

Here are the Intel Q4 earnings highlights:

  • Revenue of $13.7 billion, a 4% year-over-year decrease
  • Gross margin of 36.1% compared to 39.2% in Q4 2024
  • Net loss attributable to Intel $0.6 billion compared to a loss of $0.1 billion
    in Q4 2024
  • Diluted loss per share attributable to Intel $0.12 compared to the loss per share
    of $0.03 in Q4 2024

Intel provided an outlook for the Q1 fiscal year 2026

  • Revenue in the range of $11.7 billion to $12.7 billion
  • Gross margin 32.3%
  • Diluted loss per share attributable to Intel $0.21
Operating loss for the Intel foundries in fiscal year 2025 reached $10.3 billion.

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Intel’s weak guidance should not be a surprise

I wrote about Intel stock being overvalued and how the results of Q4 will be relatively disappointing in my article “Analysts reset Intel stock price target ahead of earnings.”

I also noted that issues with getting good yields on the 18A node will likely reflect poorly on Panther Lake’s profit margins.

Intel CFO David Zinsner confirmed this. “When you look at Q1, the gross margin decline in Q1, there’s two main components,” he said during the earnings call.

“Obviously, revenue coming down with a largely fixed cost business is going to affect gross margins. But the other piece of this is Panther Lake; while the cost structure improves from Q4 to Q1, it’s still diluted to the corporate average, and it’s a bigger percentage of the mix.”

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Intel is facing growing competition and losing market share in the consumer market. AI demand is causing high memory prices and high SSD prices. Even power supply units and fans are now getting more expensive, Notebookcheck indicated.

The marketing side of the AI boom isn’t working in PC’s favor, either, as Dell has admitted that AI marketing wasn’t great for PC sales.

Kevin Terwilliger, Dell’s head of product, said: “We’ve learned over the course of this year, especially from a consumer perspective, [that] they’re not buying based on AI.”

“In fact,” he continued, “I think AI probably confuses them more than it helps them understand a specific outcome,” PC GAMER reported.

According to data collected by Mercury Research and analyzed by Bernstein Research, Apple has been steadily growing its laptop market share at Intel’s expense and has reached a level comparable to AMD‘s, reported TechPowerUp. Rumors suggest Apple will launch a cheap MacBook model this spring, according to Bloomberg.

Qualcomm is launching its Snapdragon X2 Plus and Snapdragon X2 Elite in the first half of 2026, and these CPUs are very promising. Yes, Qualcomm hasn’t gained much market share yet, thanks to a lackluster Windows ARM experience, but this year might be different.

Qualcomm is counting on Snapdragon Guardian Technology making its chips a more attractive choice for enterprises.

Related: What Nvidia didn’t show at CES, and whether AMD should care

BofA says Intel’s stock is ahead of its capability to deliver a profitable business model

Following the release of the earnings, Bank of America analyst Vivek Arya and his team updated their opinions on Intel (INTC) stock.

The team noted that Intel cannot deliver the right manufacturing yield for its own products at the current-generation 18A node, and may not be able to promise perfect operation to external customers with the next-generation 14A node in a foundry market where Intel has no scale or history of execution.

Analysts said they estimate sales growth of 3% to 7% annually for the next three years for Intel, including $2 billion and $4 billion in external foundry sales in calendar year 2027 and 2028, respectively.

Arya estimates that Intel’s pro-forma EPS will stay below $1 even by 2028, due to three key problems.

  • External foundry customers will require incremental spending and capital expenditures.
  • ARM-based servers are taking AI market share.
  • The $1.2 billion to $2 billion in annual non-controlling interest contribution is an approximately 25% to 30% drag on reported pro-forma EPS.

In a research note shared with me, Arya reiterated an underperform rating for INTC stock and the target price of $40, based on a 3.5 multiple of his enterprise value-to-sales ratio estimate for 2027, in line with the historical range of 1.7 to 4.

Analysts noted downside risks for INTC:

  • Lower than yield/ramp at Intel Foundry, particularly for its new 18A and
    upcoming 14A nodes
  • Lack of material external foundry customer in wafer processing
  • Weaker-than-expected trends in a mature PC market
  • Accelerated share loss to major CPU competitors

Upside risks for INTC:

  • Key external foundry packaging/wafer deals that could significantly boost
    sales/utilization
  • Greater-than-expected yields/ramps at 18A and upcoming 14A nodes, resulting
    in a greater GM/utilization profile
  • Stronger-than-expected PC market from Windows 10 refresh or AI uplift
  • Geopolitical tensions boosting sentiment for domestic manufacturing asset

Intel’s fabs are still bleeding money

Intel’s fabs are its biggest issue. The company’s 10-K filing reveals that the operating loss for the foundries in fiscal year 2025 reached $10.3 billion. That is lower than the $13.3 billion operating loss foundries had in 2024, but it is still a huge problem.

With external customers likely waiting for yields to reach good levels, which will take until the end of 2026, and manufacturing to start in 2027, the fabs are still operating with only one customer, Intel itself.

Because we know that nothing has substantially changed for the fabs, we can estimate that the operating loss for them in fiscal year 2026 will be in the ballpark of the operating loss for 2025.

There is a long road ahead for the company. As a consumer, I hope they achieve a breakthrough and start ramping the yields up faster, especially with the 14A node. I hold no position in INTC at the time of writing.

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