Intel’s Yield Breakthrough Overshadowed by Sector Selloff Ahead of Earnings Showdown

Intel shares fall amid sector-wide selloff after TSMC earnings, even as company becomes first to deploy ASML's high-NA EUV for mass production, boosting 18A yields to 85%.

The world’s first chipmaker to deploy ASML’s high-NA EUV lithography in mass production has a problem: the market is too busy worrying about everyone else to care. Intel’s stock dropped sharply on Thursday, dragged down by a sector-wide malaise triggered by TSMC’s latest earnings even as the company notched a critical manufacturing milestone at its Hillsboro facility.

Shares of Intel last traded at €88.21, a decline of 2.11% on the day, widening the gap from the 52-week high of €124.58 hit in late June. The selloff came despite a flurry of bullish analyst activity. KeyBanc Capital Markets boosted its price target to $155 from $110 with an Overweight rating, while Susquehanna’s Christopher Rolland lifted his target from $80 to $115, albeit keeping a Neutral stance. HSBC also doubled its price objective. The average analyst target across TipRanks now stands at $108.16, with 10 buys, 26 holds and 2 sells.

The technology breakthrough that has analysts so excited centers on the Intel 18A process node used for the upcoming Panther Lake processors (Core Ultra Series 3). Intel has become the first chipmaker to run high-NA EUV systems from ASML – specifically the EXE:5000 and EXE:5200B models, each costing roughly $400 million – in commercial production. The tools offer 8nm resolution, a substantial improvement over the 13nm of standard EUV machines. More importantly, KeyBanc noted that Intel has pushed wafer yields on 18A from approximately 65% to around 85%, a leap that strengthens the argument that the company’s foundry turnaround is gaining real traction.

That traction is already forcing strategic shifts. Intel has sharply reduced planned orders at TSMC for the next-generation Nova Lake generation, betting instead on its own 18A capacity. The company is also accelerating in-house production of mobile processors and AI accelerators. However, the external foundry business remains a money-losing proposition: first-quarter revenue from Intel Foundry Services was just $174 million, while the segment posted a $2.4 billion loss. The massive capital expenditures – Intel guided to $60–64 billion in capex, echoing the TSMC figure that rattled markets – underscore the long and expensive road ahead.

The sector-wide pressure that pushed Intel’s stock lower stems largely from TSMC’s own “beat-and-worry” quarterly report. While Taiwan’s chip giant beat earnings estimates, investors balked at the capex increase and margin concerns. Goldman Sachs compounded the gloom by slashing its 2026 global PC shipment forecast to 255 million units, a 14% year-over-year decline, citing memory shortages, higher CPU costs and weaker upgrade cycles following the end of Windows 10 support. That headwind is particularly relevant for Intel, where the PC segment accounts for a significant portion of revenue. Analysts expect a seasonally softer second half in that market.

Against that backdrop, all eyes turn to July 23, when Intel reports second-quarter results after the US market close. Consensus estimates, according to TipRanks, call for earnings per share of $0.21 on revenue of $14.41 billion. The top line would mark the strongest quarter in six years if it lands near the upper end of the $13.8–14.8 billion range previously cited. In the first quarter, Intel beat expectations with EPS of $0.29 on revenue of $13.58 billion, up 7.4% year over year.

To streamline operations, Intel has deepened its partnership with Google Cloud, deploying Gemini Enterprise to automate chip design workflows, supply chain management and marketing. Meanwhile, the company is pressing ahead with a $5.7 billion expansion in Leixlip, Ireland, to boost Xeon 6 processor production on the Intel-3 node, while pausing expansion plans in Israel in favor of Irish and US capacity. Insider activity has also drawn attention: Executive Vice President April Miller Boise sold 40,256 shares at $99.53 on May 1.

Despite the day’s losses, Intel’s stock has rallied 162.49% since the start of the year, pushing its market capitalization to roughly €483 billion. The question now is whether the yield improvements and foundry progress can sustain that momentum when the earnings report lands – and whether the market’s current fixation on sector-wide jitters will fade enough to reward the company for its technological leap.