Intel's 2025 Stock Surge Masked by One-Time Gains and Persistent Foundry Losses

What happened

Intel's stock soared 84% in 2025, fueled by new CEO Lip-Bu Tan's cost-cutting measures and a flurry of deals, including a partnership with Nvidia. This created a narrative of operational discipline and balance sheet strength that boosted investor sentiment. However, SEC filings reveal that Q3 2025's $4.1 billion net income was largely driven by a one-time $5.5 billion gain from the Altera divestiture, with operating income at only $683 million. The Intel Foundry segment remains deeply loss-making, with a (55)% operating loss margin and external revenue stagnating at $32 million per quarter. Thus, the stock rally reflects financial engineering and optimism rather than a sustainable turnaround in core operations.

Implication

The stock's surge has already priced in a successful multi-year recovery, leaving limited upside and high downside risk if execution falters. Intel's reliance on one-time items like the Altera gain obscures weak operating profitability, while the foundry business continues to burn cash with minimal external customer traction. Government subsidies through the CHIPS Act provide temporary support but introduce political and dependency risks that could constrain future flexibility. Without evidence of durable free cash flow from operations or meaningful foundry revenue growth, the valuation at $39 appears stretched relative to peers. Therefore, trimming exposure above $50 or waiting for a reset to $28 is prudent until clearer signs of economic viability emerge.

Thesis delta

The news of cost cuts and partnerships reinforces the surface-level turnaround narrative but does not shift the core thesis that Intel's valuation is overly optimistic. The DeepValue report's 'POTENTIAL SELL' rating remains valid, as underlying financials show continued fragility and high execution risk in the foundry segment. Investors should view the stock surge as an opportunity to reduce positions rather than a confirmation of sustainable recovery.