Intel's Strategic Repricing: Is the Market Premising a Foundry Turnaround Before Wall Street?

The stock market is a theater of expectations, and Intel (INTC) is currently playing a starring role in a high-stakes drama. Intel's valuation appears to be pricing in a dramatic turnaround in its foundry business long before Wall Street analysts have fully bought in. This dislocation raises a critical question: Is the market ahead of itself, or is Intel's strategic repositioning under CEO finally gaining the traction needed to justify such optimism?

Valuation Dislocation: A Tale of Two Metrics

Intel's valuation metrics tell a story of extremes. While aligns modestly with industry norms and matches broader semiconductor averages, the sky-high P/E ratio suggests investors are betting heavily on future earnings growth rather than current performance. This divergence is stark when compared to peers like Texas Instruments and Analog Devices, which trade at significantly lower multiples. The disconnect hints at a market that is prioritizing Intel's long-term narrative-particularly its foundry ambitions-over near-term profitability.

But is this optimism warranted? Intel's Q3 2025 results offer a mixed bag. , , driven by strong demand in PCs, data centers, and foundry operations. , a testament to improved factory utilization and cost discipline. Yet the foundry segment, , remains a drag. .

Institutional Conviction: Capital Flows and Strategic Alliances

The market's enthusiasm for Intel's foundry turnaround is not entirely baseless. Institutional investors are showing signs of conviction. Norges Bank, Norway's , acquired a $1.58 billion stake in Intel during the quarter, . These moves reflect confidence in Intel's strategic direction, even as the foundry's profitability remains uncertain.

Strategic partnerships are further fueling optimism. The U.S. under the CHIPS Act, , provides critical liquidity for Intel's U.S. fab expansion. These funds are not just financial support-they signal validation of Intel's role in securing domestic semiconductor manufacturing. Additionally, contracts with cloud giants like AWS and Microsoft Azure offer long-term revenue visibility, .

However, the path to profitability is fraught. The foundry's 14A manufacturing process, critical for future competitiveness, is being scaled cautiously in response to customer demand. Meanwhile, slow internal adoption of the and intense competition from TSMC and Samsung remain headwinds.

The Cramer Take: Is the Market Premising Too Much?

Intel's reflects a market that is pricing in a successful foundry turnaround years in advance. While the company's financial discipline, strategic investments, and institutional backing are undeniably positive, the foundry's operational challenges-particularly its cost structure and customer adoption rates-cannot be ignored. The CEO's "disciplined strategy" has stabilized the business, but a full turnaround requires more than improved margins; it demands consistent profitability and market share gains.

For now, the market appears to be playing the long game. Investors who are comfortable with the risk of overvaluation may find Intel's story compelling, especially given its alignment with U.S. policy priorities and AI infrastructure growth. Yet, as with any high-multiple stock, the margin for error is slim. If the foundry's progress stalls or customer commitments fail to materialize, the current P/E ratio could become a liability rather than an asset.

In the end, Intel's strategic repricing is a bet on its ability to transform from a laggard in manufacturing to a leader in the foundry space. Whether Wall Street will eventually catch up to the market's optimism remains to be seen.