Intel shares declined 3.9% to $115.55 in early trading Thursday, extending recent losses after new data revealed the company lost server CPU market share to rivals Advanced Micro Devices and Arm in the first quarter. The selloff underscores growing concerns about Intel's competitive position even as the company reported solid quarterly results and announced a new partnership with McLaren Racing.
According to UBS analyst Timothy Arcuri, server CPU shipments rose approximately 19% year-over-year in Q1, but Intel's share slipped to 54.9% from 64.4% a year earlier. AMD captured 27.4% of the market, while Arm climbed to 17.7%. The analysts noted strong adoption of Arm-based chips by hyperscalers and said AMD is well positioned for agentic AI workloads, which require less human direction.
The erosion of Intel's server CPU dominance poses a significant challenge to the company's turnaround strategy under CEO Lip-Bu Tan. Server processors have long been a key revenue driver for Intel, and the loss of share to AMD and Arm could limit the cash flow needed to fund its ambitious foundry expansion, which aims to compete with Taiwan Semiconductor Manufacturing Co.
Despite the market share concerns, Intel reported first-quarter revenue of $13.6 billion, up 7% year-over-year. The Data Center and AI segment generated $5.1 billion, a 22% increase, while Intel Foundry revenue rose 16% to $5.4 billion. However, the company posted a net loss of $3.7 billion. For the second quarter, Intel forecasts revenue between $13.8 billion and $14.8 billion. Finance chief David Zinsner cited "unprecedented demand for silicon," and Tan noted it was the "sixth consecutive quarter of revenue above" expectations.
Intel's stock has surged nearly fivefold since Tan took the helm, but some analysts attribute part of the rally to index-linked institutional flows rather than fundamental improvements. "TSMC is the real bottleneck," said Doug O'Loughlin, president of SemiAnalysis. Jay Goldberg of Seaport Research cautioned, "No company in history has ever fallen off" Moore's law and managed a comeback.
In a separate announcement Thursday, Intel unveiled a multi-year partnership with McLaren Racing, becoming the official compute partner for its Formula 1, IndyCar, and F1 Sim Racing teams. The deal will integrate Intel's Xeon and Core Ultra processors into aerodynamic analysis, vehicle simulations, and race strategy planning. "Data into competitive advantage," Tan said, while McLaren CEO Zak Brown noted Intel's technology will help the team "design, build, and race" its cars.
The partnership provides Intel with a high-profile customer win in high-performance computing, but the broader question for investors remains whether the company can defend its server CPU market share while investing heavily in next-generation manufacturing. With AMD and Arm continuing to gain ground, and foundry clients potentially slow to commit, Intel faces a challenging road ahead.
