Intel shares dropped over 8% on Friday after the company’s weak revenue and profit forecasts overshadowed the arrival of new CEO Lip-Bu Tan and his ambitious plans to revive the struggling chipmaker.
Years of poor decisions have left Intel lagging behind in the booming AI industry, while escalating U.S.-China trade tensions threaten near-term demand for its PC processors. Although Tan outlined plans to refocus on core engineering, cut administrative bloat, and reduce workforce, analysts warn that transforming Intel’s massive structure will be slow and challenging.
Despite Tan’s focus on expanding Intel’s contract manufacturing and his recent meeting with TSMC’s CEO, analysts remain skeptical about the company’s lack of clear strategy to regain manufacturing leadership and court external customers. Executives acknowledged that first-quarter sales were buoyed by customers stockpiling chips amid trade fears.
Intel could benefit if China introduces certain exemptions on U.S. imports, given its significant presence in Asia. However, questions linger over its AI strategy. Intel’s approach of acquiring startups, rather than building internal AI capabilities, has left it trailing rivals like Nvidia, which dominates the AI chip market.
Although Intel’s stock is up 7.2% this year, outperforming Nvidia and AMD, it trades at a premium valuation, raising further concerns about its growth prospects without substantial innovation in AI.
Source: Swifteradio.com
