They have _tried_ to diversify:

They have competitive NICs, although they don't seem to be maintaining the lead there they once had.

They bought competitive network switches. These have largely languished, in part because they sat on the IP and then targeted it at weird niches.

They bought Altera. I feel like it had lost some momentum vs. Xilinx, but with AMD acquiring the latter, it's probably going to end up a wash.

The AI chips are kinda too early to tell, but at least they're playing the game.

Overall, I think they have squandered the massive advantage they had in CPUs for the last 3 decades.