Intel Shares Fall Amid Tariffs and AI Chip Restrictions

Intel shares fell 2.18% to $22 on Monday following the White House's announcement of 25% tariffs on all goods imported from Japan and South Korea. The company's reliance on complex global supply chains and the potential restriction of advanced AI chip shipments to Malaysia and Thailand are weighing heavily on investor sentiment. Intel's value score is high at 74.75, but its momentum and growth scores are weak at 26.55 and 19.18, respectively.

Intel shares fell 2.18% to $22 on Monday following the White House's announcement of 25% tariffs on all goods imported from Japan and South Korea. The company's reliance on complex global supply chains and the potential restriction of advanced AI chip shipments to Malaysia and Thailand are weighing heavily on investor sentiment [3].

Intel's value score is high at 74.75, but its momentum and growth scores are weak at 26.55 and 19.18, respectively [1]. The semiconductor giant has been positioning itself to capitalize on the recovery of the semiconductor industry and the growth of the AI segment. However, recent financial results and strategic moves suggest the company is facing significant operational challenges and intense competition.

The semiconductor industry's decline in 2022–2023, driven by oversupply and slowing consumer demand, has given way to cautious optimism. Intel's Q1 2025 results hinted at stabilization, with revenue holding steady at $12.7 billion year-over-year, outperforming AMD's $7.4 billion in the same period [1]. While net losses persist, non-GAAP metrics show progress, with EPS stabilizing at $0.13.

Intel's strategic moves aim to reduce costs and streamline operations. The company has cut non-GAAP operating expenses to $17 billion for 2025 and plans to shrink them further to $16 billion in 2026. Capital expenditures are also being trimmed, reflecting a focus on efficiency. These steps are critical to improving margins, which remain below industry averages due to high infrastructure costs [1].

Meanwhile, the sale of 51% of its Altera business to Silver Lake and the completion of its NAND chip divestiture to SK Hynix have reduced complexity, freeing resources to prioritize core CPU and foundry operations. This focus aligns with CEO Lip-Bu Tan's vision of returning to engineering excellence and customer-centricity—a shift investors are beginning to reward [1].

The AI revolution is reshaping the semiconductor landscape, and Intel is doubling down on this opportunity. Its Q1 2025 earnings highlighted strong growth in the Data Center and AI (DCAI) segment, which rose 8% year-over-year to $4.1 billion [1]. The Xeon 6 processor demonstrated a 1.9x performance boost in AI workloads over prior generations, as evidenced by MLPerf benchmarks. The company is also investing $50+ billion in U.S.-based chip plants to support advanced manufacturing, a move that could benefit from geopolitical tailwinds [1].

However, risks loom large. Intel's net profit margin remains negative at -36.2%, far below the semiconductor industry's average of 49.5%. Competitors like NVIDIA dominate AI chip sales through CUDA software and Blackwell processors, while TSMC and Samsung lead in foundry services [1]. Additionally, Intel's stock volatility—40.47% over 30 days—reflects investor uncertainty. Technical analysts warn of a potential drop below $17.94, which could trigger a steep decline [1].

The White House's announcement of 25% tariffs on all goods imported from Japan and South Korea adds another layer of uncertainty for Intel. The company's reliance on complex global supply chains means it could face disruptions and increased costs, further impacting its profitability and stock performance [3].

Investors should weigh two key factors: execution risk and market share gains. Can Intel deliver on its 18A process node and Panther Lake roadmap? Delays could derail momentum. Will AI and data center wins offset declines in consumer markets? [1].

For bulls, the $22.42 short-term price target (9.5% upside) offers potential, while long-term bulls see a $62 price tag (202.7% gain). However, the Zacks #3 “Hold” rating and negative EPS guidance for Q2 2025 ($0.00) suggest patience is warranted [1].

Intel's journey is far from over, but its moves in 2025 suggest it's fighting to reclaim relevance in an industry it once dominated—a battle that could define its stock's trajectory for years to come [1].

References:
[1] https://www.ainvest.com/news/intel-stock-surge-riding-semiconductor-recovery-ai-growth-wave-2507/
[2] https://www.tweaktown.com/news/106254/intel-rumored-to-release-arrow-lake-refresh-cpus-with-higher-clock-speeds-later-this-year/index.html
[3] https://cryptorank.io/news/feed/5a157-us-weighs-ai-chip-export-curbs-on-malaysia