Intel Corporation (INTC) saw its shares decline 3.71% in premarket trading Thursday, falling to $108.53, as a newly announced artificial intelligence infrastructure partnership with Foxconn failed to lift investor sentiment amid a broader selloff in the semiconductor sector triggered by Broadcom's (AVGO) disappointing quarterly results.
The partnership, announced Thursday morning, will see Foxconn, the world's largest contract electronics manufacturer, collaborate with Intel to develop next-generation AI infrastructure and intelligent computing platforms. Foxconn Chairman and CEO Young Liu stated the alliance will "combine the strengths of both companies" in computing platforms, systems integration, and supply chains. The companies plan to work on AI data-center equipment, including server racks utilizing Intel Xeon CPUs and new chips designed for AI workloads, as well as gear for factories, smart cities, and robotics.
However, the lack of specific financial details, customer names, or a launch timeline for the collaboration left investors uncertain about when the deal might contribute to Intel's revenue. This ambiguity, combined with a negative market reaction to Broadcom's earnings, overshadowed the positive news. Broadcom shares tumbled 15% premarket after the company reported second-quarter revenue of $22.19 billion, slightly below Wall Street expectations, and forecast $16 billion in AI chip sales for the current quarter—a figure described as "a touch light" by Reuters. "A classic case of very high expectations," commented Matt Britzman, senior equity analyst at Hargreaves Lansdown. Bernstein's Stacy Rasgon suggested Broadcom shares could "take a pause" over the next few quarters.
The broader market also felt the pressure, with Nasdaq 100 futures slipping 1.16% and S&P 500 futures down 0.36% as of 8:00 a.m. ET. Other chipmakers followed suit, with AMD (AMD) and Qualcomm (QCOM) each losing close to 4% in premarket trading. "Broadcom is finding that meeting and even slightly beating forecasts is not enough," said Dan Coatsworth, head of markets at AJ Bell.
Intel's recent rally has been tied to expectations that CPUs could make a comeback as more AI tasks shift from model training to deployment. The company has positioned itself at the Computex trade show as moving into rack-scale AI, emphasizing server-rack systems rather than just chips. CEO Lip-Bu Tan stated Intel is taking AI "from the chip to systems level." Creative Strategies chief Ben Bajarin noted that agentic inference could push data centers to a "one-CPU-to-one-GPU" setup.
Bullish investors see this as a strong case for Intel, which aims to push its Xeon server chips as a backbone for larger AI stacks, working with partners including Foxconn and SambaNova. However, the stock remains vulnerable to market sentiment, as tech shares have been on a strong run, with the S&P 500 technology sector now making up over 39% of the index's market value—the highest ever. Intel and AMD are each up more than 160% from the market's March low.
Looking ahead, traders will be watching to see if Thursday's decline represents another round of profit-taking across the chip sector or a more significant hit to Intel's AI push. The key indicator will be hard order flow rather than announcements made on stage. If AI demand slows, or if cloud buyers continue to favor Nvidia (NVDA), Broadcom, AMD, or in-house chips, Intel's gains could erode further.
