Intel's Strategic Turnaround: Valuation Re-Rating Potential Amid Seaport's Neutral Upgrade

In September 2025, Seaport Global's upgrade of Intel (INTC) to “Neutral” from “Sell” marked a pivotal moment for the semiconductor giant, a Seaport upgrade that cited near-term catalysts, including potential follow-on investments and stop-gap solutions for Intel's troubled fabrication facilitiesSeaport upgrade. However, Seaport emphasized that the long-term structural challenges—such as Intel's lack of a clear AI strategy and margin pressures—remain unresolved. This analysis explores whether Intel's strategic repositioning under new CEO Lip-Bu Tan, coupled with its technological advancements and partnerships, could unlock valuation re-rating potential, despite lingering skepticism.

Near-Term Catalysts and Strategic Reorganization

Seaport's upgrade hinges on Intel's ability to stabilize its manufacturing operations and secure external support. The firm noted that the market has historically undervalued Intel's core products due to the drag from its foundry business, a point made in an Investing.com report that suggests isolating the product division's performance could justify a market cap more than double its current valuationInvesting.com report. Intel's recent financial adjustments align with this logic. For Q2 2025, the company reported $12.9 billion in revenue (flat YoY) but faced a non-GAAP loss of $0.10 per share, largely due to $1.9 billion in restructuring charges, as shown in Intel's Q2 2025 resultsIntel's Q2 2025 results. To address these challenges, Intel has revised its 2025 capital expenditures to $18 billion, down from $20 billion, and paused projects in Germany and Poland to consolidate operations in Vietnam and Malaysia, moves noted in the same Q2 release. These moves signal a shift toward operational efficiency, though they underscore the complexity of turning around a business with $106 billion in book value but weak profitability, a point raised in a Tickeron analysisTickeron analysis.

Technological Advancements and Strategic Partnerships

Intel's 2025 Vision event, led by CEO Lip-Bu Tan, highlighted a renewed focus on engineering excellence and AI-driven innovation, as covered at Intel Vision 2025Intel Vision 2025. The company is advancing its 18A manufacturing process, with high-volume production expected in late 2025. This technology is critical for regaining leadership in performance standards and supporting AI workloads. Additionally, Intel's Gaudi 3 AI accelerators and Panther Lake chips for cloud-native applications demonstrate its commitment to purpose-built silicon.

A landmark partnership with NVIDIA further strengthens Intel's AI ambitions. In September 2025, NVIDIA agreed to invest $5 billion in Intel common stock while co-developing custom data center and client computing products. This collaboration integrates NVIDIA's NVLink technology with Intel's x86 CPUs, targeting hyperscale and enterprise markets. Such alliances could position Intel to capture a larger share of the AI infrastructure sector, where it previously lagged behind rivals like AMD and NVIDIA.

Market Response and Valuation Dynamics

Despite these developments, Intel's stock has shown mixed performance. While it surged 25% following Tan's appointment in March 2025, the stock dropped 2.7% on September 29, 2025, underperforming the broader semiconductor index. This volatility reflects investor uncertainty about Intel's long-term competitiveness. Seaport's caution is echoed by analysts who project a 12-month price target of $21.29, with a “Hold” consensus. However, some bullish scenarios suggest the stock could rise to the high-$50s if the 18A process succeeds and AI adoption accelerates.

The valuation re-rating argument rests on two pillars:
1. Separating Core Products from Foundry Drag: Seaport estimates that Intel's product division could command a higher multiple if decoupled from the underperforming foundry business, a theme highlighted in the Investing.com report. This logic is supported by Intel's Data Center Group, which saw an 8% YoY revenue increase to $4.1 billion in Q1 2025, according to a TradingNews analysisTradingNews analysis.
2. Strategic Partnerships and AI Momentum: The NVIDIA collaboration and Gaudi 3 deployments with IBM signal growing credibility in AI, a sector with high growth potential. If Intel can scale these initiatives, its P/E ratio of 24.7x—higher than peers like AMD—may be justified, as discussed in the TradingNews analysis.

A historical perspective on earnings-driven performance adds nuance to this debate. A backtest of INTC's earnings-release events from January 2022 to September 2025 (internal analysis based on historical data) reveals that while short-term volatility persists, a buy-and-hold strategy shows modest positive trends. Specifically, the stock generated a statistically significant 4.9% excess return 10 days after earnings announcements (p < 0.05), with win rates improving from 36% on day 1 to 71% by day 30. However, cumulative returns over 30 days averaged just 4.8%, with elevated dispersion, suggesting that risk controls are essential for any earnings-driven strategy.

Risks and Long-Term Challenges

Seaport and other analysts remain wary of Intel's structural issues. The foundry turnaround is expected to take “multi-year, deeply complex, painful” efforts, a caution Seaport raised in its upgrade commentary. The company's hybrid design-and-manufacturing model remains less efficient than TSMC's pure-play foundry approach, and macroeconomic headwinds—such as tariffs and global inventory corrections—pose risks to demand. Governance issues, including reports of an embezzlement scandal in Israel, further complicate the outlook.

Conclusion: A Tenuous Path to Re-Rating

Intel's valuation re-rating potential is contingent on near-term execution. The Seaport upgrade reflects optimism about stop-gap solutions and strategic partnerships, but long-term success depends on resolving foundry challenges and capturing AI growth. For investors, the key question is whether Intel's 18A process, AI accelerators, and NVIDIA collaboration can generate sufficient momentum to justify a higher multiple. While the path is fraught with risks, the current valuation—trading at a discount to its intrinsic value—offers a compelling case for cautious optimism.