Intel’s Government Backing Swells to $50 Billion as Server Share Drops Below 55%

Intel's server dominance erodes faster as share slides to 54.9%; gov't $50B+ stake provides safety net, stock up 176% YTD.

Intel’s dominance in the server-chip market is eroding faster than many expected, even as a massive government shareholding—now worth well over $50 billion—provides a political safety net. The chipmaker saw its slice of the server CPU pie shrink to 54.9% in the first quarter of 2026, according to UBS, down from more than 64% a year earlier. That slide comes as rival AMD and Arm Holdings scoop up the remaining ground, with AMD’s share climbing above 27% and Arm’s approaching 18%.

The government stake traces back to August 2025, when the Biden administration—through then-Commerce Secretary Howard Lutnick—announced the purchase of a 9.9% equity stake in Intel for roughly $10 billion. Funding came primarily from the CHIPS and Science Act, with $5.7 billion in already-committed subsidies and $3.2 billion in other federal incentives converted into shares. In a Fortune interview published Monday, President Donald Trump said he now regrets not demanding a bigger slice. “Intel should be the largest company in the world,” he remarked, adding that the administration plans to exit the position slowly to avoid jolting the stock.

That political tailwind has supercharged Intel’s share price. The stock is up 176% since the start of the year and hit a record high near €110 in mid-May. Even after a pullback that sent the shares to around €89.61 on Monday—down 4.38% on the day and 18.45% on the week—the year-to-date gain still stands at 166.66%. Over twelve months the advance is 370.54%, and the stock trades 132.25% above its 200-day moving average. Such extreme technical distances leave little room for disappointment.

The selloff follows a run that priced in a credible turnaround story. Intel surprised investors with first-quarter revenue of $13.6 billion, $1.4 billion above the midpoint of its own guidance, and delivered earnings per share of $0.29 versus a forecast for breakeven. Management has guided for second-quarter revenue as high as $14.8 billion. The manufacturing side has also offered encouragement: Intel’s 18A process node is reportedly running two to three months ahead of internal milestones, and the company recently bought back the 49% stake in its Irish Fab 34 from Apollo-managed funds for $14.2 billion, regaining full control of one of Europe’s most advanced chip factories.

Reports of a tentative agreement with Apple to produce certain chips for Apple devices, along with Elon Musk’s plan to use future Intel chips for his $119 billion Terafab project, have added to the optimism. Citi analyst Atif Malik raised his price target to $130 from $95 and reiterated a “Buy” rating, citing rising computational demands from AI agents and hyperscale data centers. Malik assumes the addressable CPU market will grow roughly 35% annually, reaching about $132 billion by the end of the decade.

Yet the server market remains the clearest fault line. UBS expects the total server market to swell to $170 billion by 2030, up from $30 billion in 2025, but Arm alone could capture 40% to 45% of unit volumes. That would put further pressure on Intel’s most profitable product line. The broader analyst consensus reflects the tension: of 44 analysts covering the stock, 31 rate it a “Hold,” and the average price target of about $79 signals significant downside from current levels.

Intel therefore presents two conflicting narratives in a single stock. On one hand, it enjoys unparalleled political backing and tangible manufacturing progress. On the other, it is losing ground in the very segment set to drive the industry’s growth over the next five years. After a rally that has already priced in much of the good news, the burden now falls on Intel’s 18A node to convert technical milestones into real customer orders and decent margins—before the server market slide accelerates further.