Intel is navigating a challenging transition as it tries to reclaim its place in the tech landscape. Despite being one of the notable success stories of 2025, with its shares nearly doubling, long-term investors have felt let down by the tech giant. Alarmingly, even though the stock price rebounded significantly, the company’s core operations reportedly lost money during the same period.
The market often looks ahead, and the growth in Intel’s stock suggests an optimistic outlook for the future; however, scrutiny of past performances indicates deeper issues that have contributed to Intel’s current circumstances. Understanding how the company reached this point is essential, especially as it outlines the steps needed for recovery.
Intel’s decline began post-2021, which marked its peak sales year, generating revenue of $79 billion. Despite this impressive figure, subtle signs of trouble were already emerging; for instance, rising costs led to a 3 percentage point drop in gross margin over two years, leaving it at 55.5%. Compounded by escalating research and development expenses, Intel’s operating margin took a hit, declining by 6 percentage points to 24.6%.
2022 exacerbated Intel’s struggles as the tech industry faced a bear market, primarily due to weakened consumer demand influenced by high inflation and broader economic pressures. Revenue fell by 20%, while net income plummeted nearly 40%. Initially enjoying strong demand for PCs during the COVID-19 pandemic, the return to normalcy revealed inflated inventories that negatively impacted sales.
The downturn continued into 2023, with net income decreasing by almost 80% and sales dropping another 14%. During this period, Intel lost market share to competitors like Nvidia and Advanced Micro Devices, which capitalized on opportunities in the rapidly growing AI sector.
By 2024, the challenges under former CEO Pat Gelsinger became more pronounced. Intel reported significant impairment charges of $15.9 billion and restructuring expenses of $2.8 billion in the third quarter. Despite efforts to reduce costs by $10 billion, weak performance in its PC and foundry divisions overshadowed any positive trends in the data center and AI segments. As a result, Intel’s board chose to part ways with Gelsinger.
In March 2025, Intel appointed Lip-Bu Tan as CEO. Previously a director on Intel’s board from 2022 to 2024, Tan brought a technology leadership background, raising hopes for a turnaround. Despite a subsequent improvement in gross margin exceeding 2 percentage points to reach 34.8%, along with a 17% decrease in research and operational expenses, Intel incurred a GAAP loss of around $300 million, translating to a loss of $0.06 per share, as revenue remained stagnant. Declines in the PC sector continued to negate gains from data center and AI sales.
Positive indicators did arise, including adjusted earnings of $0.42 per share and an operating cash flow of $9.7 billion, suggesting that Intel still holds the capability to generate capital.
Looking forward, Tan emphasizes that central processing units (CPUs) will remain crucial in the AI era, contrasting with the strategies of rivals like Nvidia and AMD, which focus more on graphics processing units (GPUs) for their AI offerings. The accuracy of Tan’s strategy could determine the success of Intel’s recovery and its ability to regain investor confidence.
Insight into Intel’s strategic plan will be pivotal as stakeholders await the company’s next moves in the complex tech landscape.
