Intel (INTC) Stock: Can New CEO Tan Stop the Bleeding After Latest Earnings?
TLDR
Intel beat Q1 expectations with $0.13 EPS on $12.7 billion revenue
Q2 revenue forecast of $11.2-12.4 billion disappointed investors (below $12.8B expectation)
Stock fell over 7% in premarket trading despite the Q1 beat
New CEO Lip-Bu Tan facing challenges from tariffs and competition
Company announced layoffs and $1.5 billion in cost cuts over two years
Intel Corporation (INTC) stock fell over 7% in premarket trading on Friday following its first-quarter earnings report. While the company beat expectations for Q1, its disappointing outlook for the second quarter sent shares tumbling in after-hours trading on Thursday.
Intel reported adjusted earnings per share of $0.13 on revenue of $12.7 billion for the first quarter. Analysts had expected adjusted EPS of $0.01 on revenue of $12.3 billion, according to Bloomberg consensus estimates.
Despite the earnings beat, Intel’s forecast for second-quarter revenue between $11.2 billion and $12.4 billion fell short of Wall Street expectations of $12.8 billion.
Earnings Details and Market Response
Client computing revenue came in at $7.6 billion versus expectations of $6.9 billion. The data center and AI segment delivered $4.1 billion against expectations of $2.9 billion.
Intel Foundry reported revenue of $4.6 billion, surpassing analyst expectations of $4.3 billion.
The strong performance in Q1 was partially attributed to customers making purchases ahead of potential tariffs. This pull-forward demand could weaken future sales.
Intel CFO David Zinsner highlighted the uncertain economic environment in a statement. “The current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook. We are taking a disciplined and prudent approach.”
Restructuring Under New Leadership
The earnings report marks the first since Lip-Bu Tan took over as CEO last month. The company announced plans to remove some layers of management but didn’t specify the target number for job cuts.
Earlier reports suggested Intel might slash more than 20% of its workforce.
The company lowered its operating expense target for this year by $500 million. It expects a further $1 billion reduction next year, bringing total cost cuts to $1.5 billion over two years.
During his first public appearance at Intel Vision 2025, Tan acknowledged past failures. “For quite a long time, we fell behind on innovation. As a result, we have been too slow to adapt and to meet your needs. You deserve better, and we need to improve. And we will.”
Wall Street analysts remain skeptical about the impact of these cost-cutting measures.
“While we applaud the enhanced cost-cutting efforts, share loss is an issue,” wrote CFRA Research analyst Angelo Zino.
Competitive Challenges and Manufacturing Strategy
Intel faces growing pressure from competitors Advanced Micro Devices (AMD) and Nvidia (NVDA). Many analysts believe the company is losing market share in both PC and server markets.
The company provided no new details on its chip manufacturing strategy during the earnings call. Intel plans to ramp up its new 18A process in the second half of the year to compete with Taiwan Semiconductor Manufacturing (TSMC).
The success of this manufacturing process will be crucial for Intel’s future. The company needs to validate the technology through its own chip production and attract external customers.
Earlier this month, reports emerged that Intel and TSMC had reached a preliminary agreement to form a joint venture to operate Intel’s chip fabrication facilities.
Intel’s stock has dropped 38% over the past 12 months, reflecting ongoing investor concerns about the company’s direction and competitive position.
Oppenheimer analyst Rick Schafer noted, “INTC’s core PC and traditional server markets appear ex-growth. We expect continued server CPU share loss this year. Intel Foundry remains unprofitable for the foreseeable.”
KeyBanc analyst John Vinh added that the lower guidance “reflects cautiousness regarding the negative end-demand impacts of tariffs.”
Intel’s immediate challenge will be navigating the potential impact of the Trump administration’s planned semiconductor tariffs in the coming months. While the company produces most of its chips in the US, it remains vulnerable to tariffs on laptops and other systems built in China.
As Intel looks to turn around its business, all eyes will be on Tan’s ability to accelerate innovation while streamlining operations to compete effectively in an increasingly challenging market.
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Filed under: News - @ April 25, 2025 12:29 pm