Intel (INTC) is one of the worst-performing semiconductor stocks of 2024. INTC stock has dropped more than 61% year-to-date and is trading near its 52-week low, significantly underperforming the benchmark S&P 500 Index ($SPX). 

Several factors contributed to Intel’s downward spiral. Intel struggled to keep pace in its core server and client CPU markets. Competitors with better-performing products seized market share, leaving Intel trailing. Further, significant losses in its foundry business weighed heavily on its overall performance.

Most importantly, the high-growth artificial intelligence (AI) accelerator market presented lucrative opportunities in the semiconductor space, but Intel’s efforts with its Gaudi2 and Gaudi3 accelerators have underwhelmed, leaving the company unable to capitalize on this booming trend.

Adding to the uncertainty, Intel recently announced the departure of CEO Pat Gelsinger. While bringing in new leadership could offer a fresh perspective, this shift signals potential changes to Intel’s strategy. Such adjustments, particularly in the foundry business, may further delay the company’s ability to align its technology roadmap with the rapidly evolving demands of the AI market. This uncertainty raises concerns about whether the company can pivot quickly enough to reclaim lost ground.

Nonetheless, the company is taking measures to steady the ship and turn its business around. However, whether Intel’s strategic adjustments and a renewed focus on products will be enough to capitalize on future opportunities remains to be seen.

With this background, let’s examine INTC’s prospects more closely to determine whether investing in its stock is a turnaround opportunity or a trap for 2025.

Intel’s Efforts to Turnaround Its Business

Intel is aggressively reinventing itself in the highly competitive semiconductor landscape. The company’s cost-cutting measures and portfolio optimizations aim to streamline operations, boost efficiency, and solidify its market position. During its third-quarter earnings call, Intel’s management emphasized improving business trends and outlined the steps taken to achieve sustainable growth.

A key part of its restructuring efforts has been workforce optimization. By the end of Q3, the company had completed most of its planned headcount reductions, putting it on track for a greater than 15% workforce reduction by year-end. This move is designed to reduce complexity, making Intel leaner and more agile. Additionally, the company has slashed its capital expenditures by over 20%, reflecting a shift toward a more efficient cadence of technology development.

Intel’s efforts extend to product portfolio simplification. It is focusing on its x86 franchise to maximize value across client, edge, and data center markets and realigning its product portfolio to offer more streamlined solutions.

The company’s product advancements are key to its turnaround plan. In the AI-driven PC space, Intel’s launch of the Core Ultra 200V series, also known as Lunar Lake, has set a new benchmark in mobile AI performance. Lunar Lake strengthens Intel’s position in the AI PC ecosystem by offering superior energy efficiency and advanced AI capabilities. Intel’s roadmap includes Arrow Lake, which debuted earlier this month, and Panther Lake, slated for a 2025 launch on the 18A process, promising even greater performance and profitability.

In the data center segment, Intel’s latest Xeon processors, codenamed Granite Rapids, and the Gaudi 3 AI accelerator, highlight its focus on enterprise AI solutions. These innovations enhance workload efficiency and solidify Xeon’s role in AI servers, although Gaudi 3’s adoption has faced challenges.

Intel is positioning itself for a solid comeback with a strong product pipeline, operational improvements, and a renewed focus on AI and advanced manufacturing.

Intel: A Cautionary Tale for Investors in 2025

Intel is at a critical juncture as it attempts to turn its business around. Despite ongoing efforts to revitalize its operations, the company may continue to lose ground in the server market in 2025 due to increased competition and a lack of immediate growth drivers on the horizon.

Intel’s challenging execution of its ambitious turnaround strategy adds to the uncertainty. Its foundry business, which aims to rival industry leaders, continues to face headwinds, further complicating its path to recovery.

Wall Street analysts remain wary, collectively assigning Intel a “Hold” rating.

Intel’s current trajectory makes it a show-me story for investors, requiring tangible results before it can regain confidence. While its turnaround could eventually bear fruit, 2025 may present more risks than rewards, making Intel a trap in the near term.