Intel Skyrockets on Nvidia Deal--But a $13 Billion Problem Still Lurks Beneath

Intel INTC has staged a stunning comeback in recent weeks, powered by a $5 billion deal with Nvidia NVDA, fresh funding from SoftBank (SOBKY), and an accelerated $8.9 billion payout from President Donald Trump's administration. The stock has now surged 48% year-to-date, tacking on more than $50 billion in market value, and is heading for its second straight month of 20%+ gains. Yet even as the headlines dazzle, investors are digging into the numbersand what they're seeing is a business still buried under massive losses from its chip foundry unit. Over the past year, that division has lost more than $13 billion despite generating nearly $18 billion in revenue.

The real sticking point? Nvidia CEO Jensen Huang made it clear that while the two companies are partnering, Nvidia is still a Taiwan Semiconductor customerand hasn't committed to using Intel's foundries. Analysts are staying skeptical. Citigroup just downgraded Intel to sell, calling the foundry's chances of success minimal. Wall Street's profit forecasts haven't moved much either: Intel is expected to deliver just $640 million in adjusted net income on $52 billion in sales next year, followed by $3.2 billion in profit for 2026. That puts Intel at nearly 43x forward earnings based on its current stock price, a multiple rarely tolerated without strong, visible, and accelerating earnings growthnone of which Intel is offering right now.

The capital drain isn't easing anytime soon. Intel's projected capex sits at $18 billion for this year and $15 billion in 2026levels that continue to push free cash flow deep into negative territory. Spear Invest's Ivana Delevska summed it up: the foundry needs to drive strong and durable earnings growth, but that still feels far off. Laffer Tengler Investments CEO Nancy Tengler put it even more bluntly: unless earnings start accelerating meaningfully, this kind of valuation doesn't make sense. So while Intel's new backers bring serious firepowerand no shortage of political and market buzzinvestors betting on a clean turnaround might want to keep one foot on the brake.