Intel (INTC) Stock Prediction & Analysis: New CEO’s Brutal Honesty Sends Shares Tumbling

Intel (INTC) Stock Prediction & Analysis: New CEO’s Brutal Honesty Sends Shares Tumbling

TLDR

• New CEO Lip-Bu Tan acknowledges Intel has “fallen behind on innovation” and recovery “won’t happen overnight”
• Intel plans to spin off non-core businesses to focus on core operations
• Tan emphasizes rebuilding engineering strength and recruiting top talent
• Intel stock declined nearly 3% following Tan’s cautious comments
• Commerce Secretary Howard Lutnick suggested withholding additional funds until chipmakers commit to more U.S. investment

Intel’s new CEO Lip-Bu Tan made his first major public appearance at the company’s Vision 2025 conference in Las Vegas. His candid assessment of Intel’s challenges sent the stock down nearly 3% as he outlined his plan to restore the struggling chipmaker to its former glory.

Tan acknowledged that Intel has endured “a tough period for quite a long time.” He directly addressed the company’s recent failures, stating they “fell behind on innovation” and were “too slow to adapt” to customer needs.

The new CEO warned investors and customers that turning around Intel “won’t be easy” and “won’t happen overnight.” This realistic assessment contrasts with previous leadership’s more optimistic timeline projections.

In his speech, Tan outlined a plan to free up resources by spinning off non-core businesses. Though he didn’t specify which divisions would be considered non-core, this approach signals a more focused strategy.

“Going forward at Intel, we will redefine some of our strategy and then free up the bandwidth. Some of the non-core business, we will spin it off, but really focus on our core business and how to expand that using AI and Software 2.0,”

Tan explained.

Rebuilding Trust Through Engineering Excellence

Tan repeatedly emphasized the importance of rebuilding Intel’s engineering culture. Truist analysts noted that he used the word “culture” more than 20 times during his address, describing his focus as a “breath of fresh air.”

A key component of Tan’s approach involves recruiting and retaining top engineering talent. “His priority is to recruit and retain the best engineers to empower growth and create a culture of innovation empowerment,” Truist analysts wrote.

Intel’s new leader also addressed customer concerns directly. He acknowledged that customers have graded Intel’s products as “modestly D’s and F’s” in recent years.

Tan promised to solicit customer feedback, correct mistakes, and rebuild trust through a philosophy of “under-promising and over-delivering.” This has been his “trademark” throughout his career, he stated.

The new CEO committed to continuing Intel’s foundry strategy, which designs and manufactures chips. “Global demand for chip production is growing, and you need supply chains that are flexible, resilient, and secure. Intel foundry plays a crucial role,” Tan said.

Intel also plans to compete with Nvidia in the rack-scale AI server market. This comes after Nvidia replaced Intel in the Dow Jones Industrial Average in November 2024, highlighting Intel’s competitive challenges.

Tan emphasized a return to a startup mentality at the tech giant. “Bureaucracy kills innovation. In my career, I’ve seen how small, focused teams can move very fast and innovate and take on incumbents, and we’re going to practice that in Intel,” he explained.

Analyst reactions to Tan’s speech were mixed. While Truist called it the “best ever messaging” from Intel management, Bernstein described it as “more of an apology than a keynote” that was “lighter on details than some might have hoped.”

Political factors may also be influencing Intel’s stock performance. Commerce Secretary Howard Lutnick suggested that the administration would withhold additional funds from chipmakers until they commit to greater U.S. investment.

This policy could particularly impact Intel, which has been one of the top recipients of government funding in the semiconductor sector.

The company has reportedly been working with investment bankers at Morgan Stanley and Goldman Sachs to restructure its business. Options include potentially splitting its foundry division.

Industry rumors suggest Broadcom may be interested in acquiring Intel’s chip design and marketing unit. Meanwhile, Taiwan Semiconductor Manufacturing Company is reportedly eyeing Intel’s chip manufacturing plants.

Tan’s focus on customer service was highlighted by Rosenblatt analysts as “fundamental to turning Intel around, particularly the Foundry business.” The firm also noted the importance of reshaping Intel’s approach to hardware design.

Intel’s recent leadership change follows the December departure of former CEO Pat Gelsinger, who had led an initiative to revamp the company’s foundry division.

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