Intel’s (INTC) solid third-quarter financial report, which beat analyst expectations, briefly kept its stock rally alive. However, Wall Street analysts warn that the company’s crucial core business—the manufacturing and Foundry division—is far from a turnaround, which could put the share price at risk in the long run. “This fight is far from over,” wrote Bernstein analyst Stacy Rasgon.

Foundry Segment is Bleeding Cash

The central problem is that Intel Foundry Services (IFS), opened to external customers in 2021, is still bleeding cash. The report showed a loss of $2.3 billion for the quarter, with only $8 million in revenue coming from external customers. This figure points to a stark failure in attracting significant clients like Nvidia or Broadcom.

Future Process Nodes and the Distant Target

Hope for success hinges on future manufacturing processes. However, Intel clarified that the 18A process will be primarily used for internal products. CFO David Zinsner admitted that 18A’s yields are “not where we need them to be,” and added that the process won’t hit peak capacity until the end of the decade. Analysts note that the critical 14A process remains “a very long way off.”

The Risk: Market Share Loss and Headwinds

The manufacturing challenges come at a difficult time, as Intel’s product division is losing market share to AMD. Analysts warn this dynamic will turn the stock into a short-term “event-driven stock,” and the eventual return to fundamentals will lead to “headwinds” for the share price. Citi analyst Chris Danely reiterated his view that Intel is years behind TSMC and should consider divesting its foundry unit.