Intel’s Balancing Act: Tenstorrent Acquisition Talks and 18A Transition Collide with $3.7 Billion Loss

Intel posts Q1 revenue beat but $3.73B loss; explores Tenstorrent acquisition over $5B, wins Microsoft Surface deal, and pushes 18A foundry process.

Intel’s latest earnings painted a picture of a company in flux. First-quarter revenue of $13.6 billion came in ahead of expectations, yet the bottom line told a different story: a GAAP loss of $3.73 billion, weighed down by a Mobileye writedown and continued red ink at the foundry division. The chipmaker now faces twin pressures to revive its credibility in artificial intelligence and to execute a costly manufacturing overhaul—all while the stock carries the weight of a nine-month rally.

Early-stage AI chip talks emerge

Sources indicate Intel has held preliminary discussions with Tenstorrent, a developer of AI accelerators, in what could become a transformative deal. Qualcomm is also said to have expressed interest. No transaction has been finalised, and the conversations remain tentative, but the valuation under consideration exceeds $5 billion.

Tenstorrent’s appeal lies in its architectural flexibility. The company builds chips using RISC-V, pairing its own Ascalon CPU cores with Tensix AI cores. Beyond selling finished semiconductors, it licenses intellectual property—a model that offers an acquirer more than just product lines. For Intel, which has struggled to gain traction with its Gaudi accelerator series, adding Tenstorrent’s technology and engineering talent would inject fresh credibility into a narrative that badly needs one.

Nvidia continues to dominate AI training, and AMD is closing fast. A Tenstorrent acquisition would not automatically flip market share, but it could give Intel a differentiated story and a faster route to custom AI silicon.

Microsoft deal shores up PC credentials

On the more traditional side of the business, Intel scored a visible win with Microsoft. The software giant is equipping its new Surface for Business line—including updated Surface Pro and Surface Laptop models—with Intel’s Core Ultra Series 3 processors. Microsoft claims that certain configurations deliver up to 35% more graphics performance than the MacBook Air with M5 and run more than 90% faster than the previous-generation Surface Laptop 5.

The chips also bring local AI processing capability, with a neural processing unit rated at up to 50 TOPS. Connectivity is upgraded to Wi-Fi 7 and Bluetooth 5.4. For corporate customers refreshing fleets, this gives Intel a strong foothold—particularly as enterprises look to run AI tasks directly on devices rather than solely in the cloud.

Foundry ramp and server market outlook

Parallel to these external moves, Intel is pressing hard on its 18A manufacturing process. The company wants PC and notebook makers to transition quickly to chips built on 18A, including the upcoming Panther Lake and Wildcat Lake architectures. The logic is clear: older Intel-7 capacity is being shifted toward server and industrial markets, where margins are fatter, while 18A becomes the foundation for AI-capable consumer hardware.

The transition is not painless. Manufacturers face design changes, new component validation, and cost pressure as they re-engineer devices. Intel appears willing to absorb some short-term friction to avoid a prolonged processor shortage that could otherwise hamper PC sales.

Citi analyst Atif Malik sees a longer runway for Intel in the server market. He expects the addressable market for server CPUs to expand to $132 billion by 2030, with Intel capturing about 47% of that and AMD around 34%. His thesis hinges on the idea that beyond GPUs, CPUs will again play a central role in inference and agent-based workloads—provided Intel can scale its foundry and packaging capabilities reliably.

Governance, guidance, and stock reality

At the annual shareholder meeting on May 13, Intel’s board secured strong backing. All 11 proposed directors were elected, including CEO Lip-Bu Tan and new independent chairman Craig H. Barratt. Shareholders rejected a set of activist proposals related to China risks and human rights reviews.

On Tuesday, Tan is scheduled to speak at the J.P. Morgan Global Technology, Media and Communications Conference. Investors will be listening closely for updates on the 18A ramp, the cost burden of the foundry business, and any signs of pricing shifts in the PC segment—areas that will determine whether the stock’s run has operational substance behind it.

For the second quarter, Intel forecasts revenue in a range of $13.8 billion to $14.8 billion and adjusted earnings per share of $0.20. Those numbers are solid but not spectacular, and they have not stopped the shares from pulling back after a dramatic surge. The stock closed Tuesday at €95.23, down 7.24% over the past week but still up 72.46% on a monthly basis. The year-to-date gain stands at 183.38%, and the 12-month rise is a staggering 399.79%. Yet the price has fallen 13.33% from its 52-week high of €109.88 set in May.

That retreat reflects a market that has already priced in much of the turnaround story. The next test for Intel is whether early-stage conversations around Tenstorrent can become a real strategic play, whether the 18A transition can be executed without disrupting customer relationships, and whether the foundry division can turn technological ambition into sustainable profit. The Microsoft Surface win helps the narrative, but it does not substitute for a breakthrough in AI accelerators.