Intel’s $20 Billion Comeback on the Line: Can Government Cash and Nvidia’s Bet Save Its Foundry Dream Tonight?

Intel’s highly anticipated third-quarter earnings report Thursday evening will serve as a major test of whether the chipmaker’s turnaround story has legs beyond government aid and headline partnerships. The stock has doubled since August, driven by optimism around U.S. government investment, Nvidia’s $5 billion stake, and new leadership under CEO Lip-Bu Tan. But with Wall Street divided over execution risk, foundry losses, and a still-thin AI strategy, Intel faces a high bar to justify its revaluation. The report will also mark its first since the U.S. government took a near-10% equity stake — a move both stabilizing and politically binding for the company’s future manufacturing commitments.

Analysts expect Intel to post adjusted earnings of $0.01 per share on revenue of $13.14 billion, with estimates ranging from a small loss to $0.10 in profit. That would mark flat sequential growth and modest progress from the $12.9 billion reported last quarter. Gross margin is projected to hover around 36%, reflecting early costs tied to the ramp of its 18A node and next-generation chips like Lunar Lake and Panther Lake. Expectations remain muted, which could allow a low-bar beat if PC and server trends hold steady into year-end.

The overarching question is whether Intel’s rebound is sustainable or merely inflated by external lifelines. In the past quarter, Intel secured a series of high-profile investments totaling nearly $20 billion — $8.9 billion from the U.S. government, $2 billion from SoftBank, and $5 billion from Nvidia — each intended to shore up liquidity and reinforce its foundry strategy. But those same moves also handcuff Intel to U.S. manufacturing policy, limiting flexibility to restructure or spin off loss-making fabs. Bank of America warned that government involvement effectively “forces Intel to remain committed to manufacturing regardless of profitability,” downgrading the stock to Underperform with a $34 price target.

The foundry business remains the most closely watched — and polarizing — piece of Intel’s story. The company’s Intel Foundry Services (IFS) segment generated $4.4 billion in revenue last quarter but posted a $3.2 billion operating loss. Management has promised to stem those losses through project consolidation, slower CapEx deployment, and tighter alignment between internal and external customers. The upcoming 18A process, manufactured at its Arizona Fab 52, is central to that plan. Intel said high-volume production for Panther Lake chips — its first 18A-based product — will begin this year, with shipments starting by late 2025. The success of that ramp will determine whether Intel can credibly position itself as a peer to TSMC in advanced manufacturing.

For this quarter, analysts will be zeroing in on several key metrics: gross margin trajectory, foundry losses, CapEx discipline, and demand within the PC and data center segments. PC shipments remained stable through September, suggesting upside potential versus Intel’s conservative guidance. Morgan Stanley expects the PC business to perform slightly better than forecast, while server CPU conditions have tightened — a development that could benefit Intel’s Data Center and AI (DCAI) segment. KeyBanc analyst John Vinh believes Intel will “benefit from broad-based server strength and customer upgrades to Granite Rapids,” its next-generation Xeon processor.

Still, competitive pressures loom large. Intel remains years behind AMD and Nvidia in high-performance compute and AI chips, with little visibility into a cohesive AI strategy beyond inference-based products. Lip-Bu Tan has acknowledged the gap, pledging to pivot toward “agentic AI” and full-stack software integration. Yet Bank of America and Citi have both questioned whether those ambitions can meaningfully offset its disadvantage in training hardware. Citi, which downgraded Intel to Sell, called the stock “priced for foundry success that may never materialize.”

Beyond earnings, investors will want updates on the flurry of strategic deals that reshaped Intel’s balance sheet and perception. The Nvidia partnership stands out — the two will co-develop PC and data center chips integrating Intel CPUs with Nvidia graphics. While that does not mean Intel will fabricate Nvidia’s silicon, it does tie the companies’ roadmaps together in a way that could reshape the AI PC landscape. Analysts like Ming-Chi Kuo suggest the collaboration could define the next phase of x86 and inference server development, leveraging Intel’s distribution and Nvidia’s GPU dominance.

The U.S. government’s investment, though politically motivated, has implications for the global semiconductor ecosystem. Washington’s $11.1 billion stake aligns with the Biden and Trump administrations’ bipartisan push to onshore critical chip production. However, Intel warned the deal could complicate its foreign operations — particularly in Europe, where it recently canceled projects in Germany and Poland. CEO Tan has made clear that future CapEx will be contingent on clear customer volume commitments, signaling a more disciplined capital allocation strategy.

In addition, SoftBank’s $2 billion investment marks the latest tie-up in Intel’s broader effort to reestablish itself as both a manufacturing and design powerhouse. Deutsche Bank applauded Tan’s balance sheet-first approach, noting that “these actions reflect an aggressive pursuit of strengthening the company’s foundation at all costs.” However, the firm also cautioned that the financial benefits of these moves “are unlikely to materialize before 2028.”

Heading into tonight’s report, sentiment remains sharply divided. Intel’s stock has surged nearly 100% since August, vastly outperforming the SOXX ETF’s 30% gain this year. Options markets imply a potential 7–10% swing in either direction following earnings — suggesting traders expect a volatile reaction regardless of the outcome. Most analysts maintain neutral or cautious stances, with consensus targets around $30–34, roughly 15–20% below current levels.

Ultimately, tonight’s call will hinge less on Q3’s modest numbers and more on management’s credibility in outlining a sustainable recovery. Investors want to hear whether Intel’s 18A timeline is intact, if foundry losses are peaking, and whether recent partnerships mark a strategic inflection point or temporary relief. After years of false starts and missed process milestones, Intel’s leadership needs to demonstrate that the combination of government backing, outside capital, and tighter execution can finally move the company from survival mode to growth mode.

Whether the report confirms that narrative — or exposes the limits of hope and subsidies — will determine if Intel’s dramatic rally holds or falters into year-end.