/Intel%20Corp_%20badge%20holder-by%20hasrul_rais%20via%20Shutterstock.jpg)
Intel’s (INTC) incoming CEO, Lip-Bu Tan, is set to implement sweeping changes as he returns to lead the struggling tech giant. Intel stock popped nearly 7% in a single trading session after Tan unveiled his strategic vision, renewing investor confidence.
Tan’s turnaround strategy focuses on revitalizing Intel’s manufacturing operations while addressing years of misguided decisions that left the company with a $19 billion annual loss in 2024 – its first since 1986.
His plan includes restructuring Intel’s approach to artificial intelligence, aggressively pursuing new foundry customers, and tackling what he views as a “bloated” middle management layer.
The new CEO, who will receive approximately $66 million in stock options and grants alongside his $1 million salary, faces significant challenges. He aims to improve Intel Foundry’s performance by wooing customers like Nvidia (NVDA) and Google (GOOG) (GOOGL), who have shown interest in early test runs of Intel’s manufacturing process.
Tan also intends to restore Intel’s competitive edge in AI chips, a market dominated by Nvidia. However, industry sources suggest it could take until at least 2027 before Intel can develop a compelling new AI chip architecture.
Tan’s leadership represents perhaps the last opportunity to revive America's’once-dominant semiconductor icon. Valued at a market capitalization of $104 billion, Intel stock trades nearly 50% below its 52-week high. In the last 10 years, it has returned -24% to shareholders, grossly underperforming its peers and the broader markets.
As historical returns shouldn’t matter much to current and future investors, let’s see if INTC stock can stage a rebound in 2025.
Is INTC Stock a Good Buy Right Now?
In the fourth quarter of 2024, Intel reported revenue of $14.3 billion, down 7% year-over-year. The company expects sales in Q1 to decline to $12.2 billion, given midpoint estimates, amid seasonal weakness, tariff concerns, and competitive pressures. Its adjusted gross margin is also expected to hit a low point of 36% in Q1 before improving throughout 2025.
Intel is maintaining its foundry strategy but with greater fiscal discipline. It remains on track to reduce 2025 capital expenditures to $20 billion while focusing on improving asset utilization. Moreover, it expects Intel Foundry to report a breakeven operating profit by late 2027.
Intel has reorganized priorities across client computing, traditional data centers, and AI infrastructure in product development. The company’s management emphasized a more pragmatic approach to manufacturing partnerships. For instance, Intel Products will now have greater flexibility in using Taiwan Semi (TSM) for specific designs while maintaining external manufacturing at 30% of total production volume. This balanced approach aims to optimize competitiveness while supporting Intel’s foundry ambitions.
Is Intel Stock Undervalued?
Analysts tracking Intel expects its sales to rise from $53.1 billion in 2024 to $53.5 billion in 2025 and $57.4 billion in 2026. Moreover, adjusted earnings are forecast to expand to $0.49 per share in 2025 and $1.14 per share in 2026, compared to a loss of $0.24 per share last year. Notably, Intel will be spending more than $40 billion in capital expenditures over the next two years, which will mean it will report a free cash outflow through 2027.
Priced at 21x forward earnings, INTC stock might seem cheap, but it remains vulnerable to competition and other macroeconomic factors. Out of the 37 analysts covering INTC stock, one recommends “Strong Buy,” 31 recommend “Hold,” and five recommend “Strong Sell.” The average target price for Intel stock is $24.43, indicating marginal upside potential from current levels.
