2025 was a solid year, and valuations aren't cheap, yet there is still significant upside left in these three AI leaders.2025 is nearly over, and despite the strong year, many investors are biting their fingernails over the prospects for 2026. Will the artificial intelligence (AI) boom continue despite talks of a bubble and debt investors recently balking at funding large-scale data centers? Whom will President Donald Trump pick as the new Federal Reserve chair, and will the new nominee be independent?Short ...

Core Insights - Intel's Q3 earnings report indicates a revenue of $13.7 billion, reflecting a 3% year-over-year increase, with a diluted EPS of $0.90 and a gross margin of 38.2% [6] - The company anticipates that yields for its 18A manufacturing process will improve to industry-acceptable levels by the end of next year, with better performance and yield expected from the next-generation 14A node [1][4] - Analysts have noted that demand for Intel's CPUs is exceeding supply, a trend that may persist into 2026, leading to a raised Q4 outlook by 3% [4] Financial Performance - Revenue for Q3 was $13.7 billion, up 3% YoY, with a net income of $4.1 billion compared to a net loss of $16.6 billion in Q3 2024 [6] - The guidance for Q4 revenue is projected between $12.8 billion and $13.8 billion, with a gross margin expected at 34.5% [6] - The company’s Q4 guidance includes a gross margin target of 36.5%, but analysts suggest that a full EPS recovery requires a gross margin above 45% [9] Analyst Insights - Bank of America has lowered its pro forma EPS estimates for 2026 by 4% to $0.51, citing slow internal adoption of the 18A node and competitive pressures in the foundry market [7] - The stock is considered overvalued, trading at a 50 multiple price-to-earnings estimate for 2027, with a reiterated underperform rating and a price target of $34 [8] - Key challenges identified include gross margin pressure, tough competition in both products and foundry, and a lack of large external customer wafer orders [9]

Core Insights - Intel is undergoing a strategic shift under CEO Lip-Bu Tan to become more "lean, fast and agile," which includes significant workforce reductions aimed at lowering headcount to 75,000 by year-end [3] - The company is adopting a more conservative business approach, focusing on financial discipline and avoiding overextension in its operations [4] Business Strategy - Intel previously expanded its manufacturing capacity under former CEO Pat Gelsinger, but this strategy led to billions in losses from 2022-2024 due to overestimated customer demand [4] - The company is currently ramping up its 18A process with plans for high-volume production by the end of the year, while the future of the 14A node will depend on customer demand and investment costs, with clarity expected by 2026 [6][7] Customer Engagement - Intel intends to engage with customers to gauge demand before expanding manufacturing capacity for the next-generation 14A chipmaking process [7] - There is a possibility of contracting 14A production to third-party foundries like TSMC, but the likelihood of this occurring is considered low [7] Government Support - The U.S. government's equity stake related to the CHIPS and Science Act grants has provided Intel with more operational flexibility, removing previous constraints [7]