The first three months of 2025 were a tough run for the market. The S&P 500 lost 4.6% and the Nasdaq Composite lost 10.4%. Bucking the trend, however, shares of Intel (INTC -7.28%) were up 13.3%.
After years of underperformance, Intel has shown signs of turning the tide over the course of the last few months.
A promising new venture
Most recently, Intel revived a bump from the news that it and Taiwan Semiconductor Manufacturing Company (TSMC) — the world’s premiere chip manufacturer — had reportedly reached an agreement that could revitalize Intel’s struggling foundry business. Under the deal, TSMC would take a 20% stake in a new organization that would operate Intel’s semiconductor manufacturing facilities, with Intel and other U.S. semiconductor firms controlling the remainder.
Intel’s foundry business has been the source of pain for the struggling chipmaker. The deal would be a remarkable collaboration between what are otherwise competitors and could help revitalize Intel. TSMC would provide both its technical expertise and help transform Intel’s management culture, which has garnered a reputation for sluggishness in recent years.
Intel’s new CEO is shaking things up
This comes as the company’s new CEO, Lip-Bu Tan, is moving to shake things up at the ailing chipmaker. Tan, among other things, plans to shift the company’s approach to AI and make significant staff cuts aimed at addressing a “slow-moving and bloated middle management layer.” Tan told employees earlier this year that the company will need to make “tough decisions,” signaling he will take a more aggressive approach than his predecessor.
Tariffs aren’t helping
Despite the positive news, the ongoing trade war is pressuring Intel’s stock. While much of Intel’s manufacturing is domestic, its supply chain is global. Furthermore, the company does a significant portion of its business in China, selling its chips into the growing market, and the new tariffs represent a material threat to its business. The tariffs will make Intel’s ability to sell in China at a competitive price difficult, and it could find itself ceding market share to Chinese chipmakers. If the trade war doesn’t de-escalate, Intel and other American semiconducting companies could be blocked altogether from selling into China.
I think it’s an interesting time at Intel, and there are real signs that it is beginning to right the ship. However, the uncertainty around trade between the U.S. and China means I would hold off for the time being until more clarity emerges.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
