The MoatNarrow moat

Intel (INTC) — moat facet

Intel's x86 franchise still earns about $13 billion a year, and its factories give most of it back, because almost no one but Intel uses them.

Intel's moat is a franchise with a factory bolted to it, and the two have opposite economics. The franchise is x86: roughly seven in ten PC processors and two in three server processors, the product of decades of installed base and design relationships. Intel Products, the client and data center businesses, earned $12,739 million of operating income in 2025 on $49,147 million of revenue1.

2025 operating income by part ($M)Intel Products12,739All Other264Corporate unallocated-5,518Intel Foundry-10,318Intel Form 10-K FY2025, Note 3; eliminations +619
The franchise earns; the factories and corporate costs take it back.

The factory is Intel Foundry, the only leading-edge logic manufacturing operation in the United States2. It lost $10,318 million in 2025 on revenue that was about 98% sales to Intel itself34. Together, Intel reported an operating loss of $2,214 million5.

The franchise is shrinking. Mercury Research estimated Intel's share of PC and server processor units at 69.3% in the second quarter of 2026, below 70% for the first time since 19956, and AMD's share of server processor revenue at 46.2% in the first quarter7. Intel's own 10-K says it missed the shift in compute demand to GPUs optimised for AI and has been unsuccessful to date in becoming a meaningful participant in that market8.

Two things hold it up. A shortage in 2026 let Intel raise prices sharply, lifting gross margin to 40.4% in the second quarter9. And the United States government, Nvidia and SoftBank bought shares10, giving the factories strategic backers.

Return on invested capital, computed from EDGAR, was between 12.4% and 20.0% from 2015 to 202111, and negative in 2024 and 202512.

The history of returns tells the same story from the other side. Intel earned between 12.4% and 20.0% on invested capital every year from 2015 to 202113, comfortably above any reasonable cost of capital, while it was the dominant x86 supplier and its factories were ahead. The returns disappeared as it fell behind in manufacturing and spent heavily to catch up. A moat that once produced 20% returns and now produces losses has not vanished, but it no longer pays for the castle.

The moat is narrow and narrowing. The one test that would change that is outside demand for the factories: external foundry revenue, $293 million in the second quarter of 202614, would have to become billions for the factories to turn from a cost of the franchise into a second business.

Moat trajectory: Narrowing

x86 share fell below 70% for the first time since 1995; the foundry still lacks outside customers.

The number that tests this moat
Moat Explorer calc
ROIC vs 10% hurdle (EDGAR calc)
Negative in 2024 (-6.0%) and 2025 (-0.9%); 13.8% in 2021

Returns on the whole business; a return above 10% would mean the factories have stopped consuming what the franchise earns.

How it's calculated: NOPAT divided by average operating invested capital from SEC EDGAR XBRL (tools_roic_edgar.py); 2022 and 2023 not computable from the filed tags.
Source: Moat Explorer ROIC calculation from EDGAR ↗
Aspects of the moat
DIG DEEPER 01
The x86 Franchise, at a Thirty-Year Low
Intel still sells seven in ten x86 chips, but it has not held a smaller share since 1995, and a chip shortage is disguising the decline.
DIG DEEPER 02
The Factories: America's Only Leading-Edge Maker
Intel owns America's only leading-edge chip factories, and they lost $30.7 billion in three years because almost nobody but Intel uses them.
DIG DEEPER 03
Other People's Capital
Washington, Nvidia, SoftBank and two private equity firms paid to keep Intel's factories running, and ordinary shareholders paid for it in dilution.
DIG DEEPER 04
Cutting to Pay for the Factories
Intel has cut a third of its staff and billions of research spending to pay for its factories, which is repair, not a moat.
References
  1. ReportedIntel Products, the client and data center businesses, earned $12,739 million of operating income in 2025 on $49,147 million of revenue.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 1 business: products, process technology, competition, manufacturing and customers. — FY2025 · publ. 23 January 2026 · source ↗
  2. ReportedThe factory is Intel Foundry, the only leading-edge logic manufacturing operation in the United States.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 7 MD&A and Note 3: segment revenue, operating income and drivers. — FY2025 · publ. 23 January 2026 · source ↗
  3. ReportedIt lost $10,318 million in 2025 on revenue that was about 98% sales to Intel itself.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 1 business: products, process technology, competition, manufacturing and customers. — FY2025 · publ. 23 January 2026 · source ↗
  4. Moat Explorer calcIt lost $10,318 million in 2025 on revenue that was about 98% sales to Intel itself.
    Moat Explorer calculation from Intel's reported figures ($ millions unless stated). Segment margins 2025: Client Computing 9,317 / 32,228 = 28.9% (2024: 11,594 / 33,346 = 34.8%; Q2 2026: 2,343 / 8,877 = 26.4%); Data Center and AI 945 / 15,980 = 5.9% (2023), 1,414 / 16,125 = 8.8% (2024), 3,422 / 16,919 = 20.2% (2025), 2,474 / 6,262 = 39.5% (Q2 2026); Intel Products 12,739 / 49,147 = 25.9%. Revenue shares 2025: client 32,228 / 52,853 = 61.0%; data center 16,919 / 52,853 = 32.0%; together 49,147 / 52,853 = 93.0%. Client growth Q2 2026: 8,877 / 7,871 - 1 = 12.8%. Foundry: internal revenue 17,826 - 307 = 17,519, 17,519 / 17,826 = 98.3%; external share 307 / 17,826 = 1.7%; operating losses 7,083 + 13,291 + 10,318 = 30,692. Intel share of x86 server revenue Q1 2026: 100 - 46.2 = 53.8%. Revenue 2025 against 2021: 52,853 / 79,024 - 1 = -33.1%. Headcount 82.3 / 124.8 - 1 = -34%. Government stake 433.3M x $127.39 = about 55.2 bn; purchase funds 5.7 + 3.2 = 8.9 bn. Warrants 241M x (127.39 - 20.00) = about 25.9 bn. Nvidia stake 215M x 127.39 = about 27.4 bn; 215 / 4,994 = 4.3%. Backers 11.0 + 8.9 + 5.0 + 2.0 = 26.9 bn. Apollo 14.2 - 11.0 = 3.2 bn. Mobileye 100% - 23% = 77%. Net debt end-2025: (2,499 + 44,086) - (14,265 + 23,151) = 46,585 - 37,416 = 9,169; 27 June 2026: (1,988 + 48,549) - (12,874 + 16,853) = 50,537 - 29,727 = 20,810. Shares: diluted 4,530 / 4,090 - 1 = 10.8% (2021-2025); outstanding June 2026 5,043 against 4,090 diluted in 2021 = 23% more. China share of revenue 12,694 / 52,853 = 24.0% (2025); 15,532 / 53,101 = 29.2% (2024); China 12,694 / 22,961 - 1 = -44.7% (2021-2025). Gross margin 43,815 / 79,024 = 55.4% (2021); 21,711 / 54,228 = 40.0% (2023). R&D 16,546 - 13,774 = 2,772; R&D share of revenue 13,774 / 52,853 = 26.1% (2025), 16,546 / 53,101 = 31.2% (2024). Operating cash flow to gross capital spending 9,697 / 17,672 = 0.55. All Other external revenue: 54,228 - 32,305 - 15,980 - 547 = 5,396 (2023); 53,101 - 33,346 - 16,125 - 159 = 3,471 (2024); 52,853 - 32,228 - 16,919 - 307 = 3,399 (2025). Trailing EPS to June 2026: -0.06 - (-0.19 - 0.67) + (-0.73 - 2.16) = -2.09. Market value 669.37 / 86.48 = 7.7 times end-2024; share price 127.39 / 29.23 = 4.4 times the 52-week low - segment margins, revenue mix and market shares. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Intel's Forms 10-K, 10-Q, results releases, prepared remarks and market data; operands shown in the source line.
  5. ReportedTogether, Intel reported an operating loss of $2,214 million.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 1 business: products, process technology, competition, manufacturing and customers. — FY2025 · publ. 23 January 2026 · source ↗
  6. Third-party estimateMercury Research estimated Intel's share of PC and server processor units at 69.3% in the second quarter of 2026, below 70% for the first time since 1995, and AMD's share of server processor revenue at 46.2% in the first quarter.
    TechPowerUp, Mercury Research Q2 2026: Intel's share of PC and server x86 units at 69.3%, below 70% for the first time since 1995. — Q2 2026 · publ. 25 August 2026 · source ↗
  7. Third-party estimateMercury Research estimated Intel's share of PC and server processor units at 69.3% in the second quarter of 2026, below 70% for the first time since 1995, and AMD's share of server processor revenue at 46.2% in the first quarter.
    Tom's Hardware, Mercury Research Q1 2026: AMD at 46.2% of x86 server CPU revenue and 38.1% of all x86 CPU market value. — Q1 2026 · publ. 14 May 2026 · source ↗
  8. ReportedIntel's own 10-K says it missed the shift in compute demand to GPUs optimised for AI and has been unsuccessful to date in becoming a meaningful participant in that market.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - Item 1A risk factors and legal proceedings. — FY2025 · publ. 23 January 2026 · source ↗
  9. ReportedA shortage in 2026 let Intel raise prices sharply, lifting gross margin to 40.4% in the second quarter.
    Intel second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 23 July 2026 · source ↗
  10. ReportedAnd the United States government, Nvidia and SoftBank bought shares, giving the factories strategic backers.
    Intel Form 10-K for fiscal 2025 (year ended 27 December 2025) - financial statements and notes: results, capital, government and partner transactions, restructuring and tax. — FY2025 · publ. 23 January 2026 · source ↗
  11. Moat Explorer calcReturn on invested capital, computed from EDGAR, was between 12.4% and 20.0% from 2015 to 2021, and negative in 2024 and 2025.
    Moat Explorer calculation, tools_roic_edgar.py on SEC EDGAR XBRL for CIK 50863: return on invested capital 15.6% (2015), 13.3% (2016), 12.4% (2017), 20.0% (2018), 17.7% (2019), 16.8% (2020), 13.8% (2021); not computable in 2022 and 2023; negative in 2024 (-6.0%) and 2025 (-0.9%). — 2015-2025 · publ. September 2026 · source ↗
    Method: NOPAT (operating income x (1 - effective tax rate)) divided by average operating invested capital (total assets less current liabilities less cash), from SEC EDGAR XBRL via tools_roic_edgar.py. 2022 and 2023 are not computable from the filed tags; 2024 and 2025 are operating losses.
  12. Moat Explorer calcReturn on invested capital, computed from EDGAR, was between 12.4% and 20.0% from 2015 to 2021, and negative in 2024 and 2025.
    Moat Explorer calculation, tools_roic_edgar.py on SEC EDGAR XBRL for CIK 50863: return on invested capital 15.6% (2015), 13.3% (2016), 12.4% (2017), 20.0% (2018), 17.7% (2019), 16.8% (2020), 13.8% (2021); not computable in 2022 and 2023; negative in 2024 (-6.0%) and 2025 (-0.9%). — 2015-2025 · publ. September 2026 · source ↗
    Method: NOPAT (operating income x (1 - effective tax rate)) divided by average operating invested capital (total assets less current liabilities less cash), from SEC EDGAR XBRL via tools_roic_edgar.py. 2022 and 2023 are not computable from the filed tags; 2024 and 2025 are operating losses.
  13. Moat Explorer calcIntel earned between 12.4% and 20.0% on invested capital every year from 2015 to 2021, comfortably above any reasonable cost of capital, while it was the dominant x86 supplier and its factories were ahead.
    Moat Explorer calculation, tools_roic_edgar.py on SEC EDGAR XBRL for CIK 50863: return on invested capital 15.6% (2015), 13.3% (2016), 12.4% (2017), 20.0% (2018), 17.7% (2019), 16.8% (2020), 13.8% (2021); not computable in 2022 and 2023; negative in 2024 (-6.0%) and 2025 (-0.9%). — 2015-2025 · publ. September 2026 · source ↗
    Method: NOPAT (operating income x (1 - effective tax rate)) divided by average operating invested capital (total assets less current liabilities less cash), from SEC EDGAR XBRL via tools_roic_edgar.py. 2022 and 2023 are not computable from the filed tags; 2024 and 2025 are operating losses.
  14. ReportedThe one test that would change that is outside demand for the factories: external foundry revenue, $293 million in the second quarter of 2026, would have to become billions for the factories to turn from a cost of the franchise into a second business.
    Intel Form 10-Q for the quarter ended 27 June 2026 - segments, the Ireland SCIP repurchase, escrowed shares, Intel 14A, customer deposits and debt. — Q2 2026 · publ. 24 July 2026 · source ↗
Sources
Generated September 25, 2026