Sales of Apple's (NASDAQ: AAPL) iPhone are booming. Revenue from the iPhone soared 23% year over year in the first quarter of fiscal 2026, marking the best-ever performance for Apple's flagship product. However, sales could have been even better. Apple uses TSMC to manufacture its custom iPhone chips, and there currently isn't enough supply to meet demand. The AI boom and the subsequent demand for AI accelerators have created an industrywide shortage. Where to invest $1,000 right now? Our analyst team jus ...

Core Insights - Intel's stock experienced an impressive 84% surge in 2025, outperforming competitors Nvidia and AMD, indicating a positive shift in investor sentiment despite ongoing challenges in the company's turnaround efforts [1]. Management Changes - Following the unexpected removal of former CEO Pat Gelsinger, industry veteran Lip-Bu Tan was appointed as CEO in March 2025, implementing cost-cutting measures, layoffs, and a thorough review of business lines [3]. - Tan emphasized a disciplined approach to Intel's foundry business, with investments in the upcoming Intel 14A process contingent on confirmed customer commitments due to rising development costs [3]. Foundry Business Developments - Intel's foundry business received potential positive news with rumors that Apple may consider using Intel's 18A process for its M-series processors in 2027, which would signify a significant endorsement of Intel's foundry capabilities [4]. Strategic Partnerships and Investments - A key factor in Intel's stock performance was the series of strategic deals orchestrated by Tan, including an $8.9 billion equity investment from the U.S. Government and a $2 billion equity investment from SoftBank, enhancing Intel's financial stability [5]. - The most notable agreement was with Nvidia, which included a $5 billion investment and a collaboration to develop data center and PC CPUs that integrate technologies from both companies, marking a significant advancement in Intel's product offerings [6]. Overall Positioning - By the end of 2025, Intel emerged in a much stronger position, bolstered by cost management and strategic partnerships, setting a positive outlook for the company's future [7].

Core Viewpoint - Intel's stock experienced a significant increase of nearly 90% in 2025, driven by new leadership and substantial investments from the U.S. government, Nvidia, and SoftBank, alongside cost-cutting measures. However, for continued growth in 2026, Intel must navigate several challenges and secure key customers for its foundry business [1]. Group 1: Foundry Business and Customer Acquisition - Intel needs to secure a major customer for its foundry business, with rumors suggesting that Apple may consider using the Intel 18A process, which would be a significant achievement if realized [3]. - The company must demonstrate progress in attracting customers for its upcoming Intel 14A process, set to launch in 2027 [3]. Group 2: Product Development and Market Competition - The Intel 18A process will be critical for the launch of the Panther Lake and Nova Lake CPU families in 2026, as Intel aims to regain market share lost to AMD due to previous manufacturing disadvantages [4]. - New manufacturing processes are expected to help Intel close the gap with TSMC, AMD's manufacturing partner, which has been a key factor in Intel's competitive landscape [4]. Group 3: Market Conditions and Challenges - The current memory chip market is facing challenges, with prices rising due to high demand amid the AI boom, which could negatively impact Intel's PC CPU business growth in 2026 [6]. - Despite the temporary headwinds in the memory chip market, Intel's foundry business represents a multi-billion-dollar opportunity as demand for custom-designed chips increases [7].

Core Insights - Microsoft is reportedly committed to using Intel Foundry for its next-generation AI chip, indicating a significant partnership between the two companies [2][3][6] - The demand for AI accelerators is surging, and Intel Foundry is positioned to benefit from this trend due to limited advanced manufacturing capacity at TSMC [2][5] Company Developments - Intel Foundry has faced challenges in gaining customer trust due to a history of manufacturing delays and lack of a proven track record [1] - Microsoft is heavily investing in AI data centers, forecasting capital spending to reach $30 billion in Q1 of fiscal 2026 [4] - The first version of Microsoft's Maia AI chip was produced using TSMC's 5nm process, but future iterations may leverage Intel's 18A process for better energy efficiency [3][4] Industry Trends - The AI chip manufacturing capacity is expected to be outstripped by demand, with TSMC ramping up its 2nm production plans in response to the AI boom [5] - If the partnership between Microsoft and Intel is confirmed, it could signal a shift in the competitive landscape, giving Intel a chance to challenge TSMC's dominance in the foundry market [6]

Core Insights - Intel has faced significant challenges entering this year, including a lack of a permanent CEO until March and struggles in its foundry business, which is crucial for generating external revenue [1] - The company has secured a partnership with Nvidia, which will involve joint development of custom chips for data centers and PCs, providing Intel with much-needed external customers and capital [4][6] Group 1 - Intel's foundry business was not attracting meaningful customers, leading to concerns about its viability [1] - The appointment of Lip-Bu Tan as CEO marks a pivotal change for Intel, as the company seeks to stabilize and grow its operations [1] - Nvidia's investment of $5 billion in Intel will help fund the foundry business and support the scaling of Intel's manufacturing processes [7] Group 2 - The collaboration with Nvidia will involve the development of custom x86 chips for data centers and system-on-chips that integrate Intel's CPU technology with Nvidia's GPU chiplets [4] - Intel's new initiative to design custom semiconductor chips for external customers is exemplified by this partnership with Nvidia, which is expected to be the first of many [5] - The deal signifies a critical step for Intel in securing a major external foundry customer, which is essential for its long-term strategy [6]

Core Viewpoint - Intel has completed the sale of a majority stake in Altera, which is expected to allow the company to focus on its core business and improve its financial position [1][4][6]. Financial Performance - Altera generated revenue of $816 million with a gross margin of 55% and operating expenses of $356 million in the first half of 2025 [1]. - In comparison, Altera's revenue was $454.4 million in Q4 2014, prior to Intel's acquisition [2]. Transaction Details - The sale involved Intel receiving $3.3 billion for a 51% stake in Altera, while retaining a 49% interest [4]. - The transaction officially closed on September 12, and Intel's accounting treatment for Altera will switch to the equity method post this date [4]. Cost Management - Intel has revised its non-GAAP operating expenses for 2025 to approximately $16.8 billion, down from a previous target of $17 billion [5]. - The company is undergoing a cost-cutting initiative, including significant layoffs and the outsourcing of marketing operations to Accenture [8][9]. Strategic Focus - The sale of Altera allows Intel to raise capital for its foundry ambitions and to divest from a non-core business [6]. - Intel aims to regain market share in the PC and server CPU sectors while also attracting customers for its foundry business [11][12]. Future Outlook - The success of Intel's upcoming chip processes, such as the Intel 18A and 14A, will be critical for the company's recovery and growth [12]. - The divestiture of Altera is seen as a positive step, allowing Intel to concentrate on its core operations and strategic goals [14].

Core Viewpoint - Intel's second-quarter earnings report reflects a complex but ultimately positive narrative, indicating that the company's restructuring strategy is on track despite significant short-term costs [2][9]. Financial Performance - Q2 revenue reached $12.9 billion, flat year-over-year, but exceeded both Intel's guidance and Wall Street expectations [3]. - The Data Center and AI Group (DCAI) segment saw a 4% year-over-year revenue increase, while the Client Computing Group (CCG) experienced a slight 3% decline [4]. - The non-GAAP loss of $0.10 per share was primarily due to planned one-time charges, including $1.9 billion in restructuring costs and $800 million in asset impairments, viewed as investments for future efficiency [5]. Forward-Looking Guidance - The forecast for Q3 non-GAAP gross margin is approximately 36.0%, a significant improvement of over 600 basis points from Q2's 29.7% [6][7]. - This guidance indicates that cost-cutting measures are beginning to positively impact profitability, with gross margin serving as a key measure of manufacturing efficiency and pricing power [7]. Strategic Execution - The earnings report serves as a scorecard for management's execution, demonstrating that Intel is delivering on its strategic promises [8]. - The company has completed most of its planned 15% workforce reduction and is on track to meet long-term operating expense targets for 2025 and 2026 [11]. - Intel is halting planned factory projects in Germany and Poland and slowing construction in Ohio to align spending with market demand, part of its Smart Capital strategy [11]. Balance Sheet and Technology - In July, Intel strengthened its balance sheet by selling 57.5 million Mobileye shares, adding $922 million in cash [11]. - Key product milestones were achieved, including the start of production for the advanced Intel 18A process and confirmation of the first Panther Lake processors for shipment this year [11].