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Intel (INTC) continues its uphill climb to regain lost ground in an increasingly competitive and uncertain environment. Despite delivering better-than-expected results for its first-quarter, lingering concerns make INTC stock a risky proposition.
In its latest quarter, Intel reported revenue of $12.67 billion, essentially flat compared to last year's period but ahead of analysts’ forecasts. Intel’s adjusted earnings per share (EPS) came in at $0.13, also beating Wall Street expectations. Management attributed part of this revenue outperformance to customer behavior — specifically, early purchasing ahead of potential tariff changes.
Despite these bright spots, Intel is facing significant challenges. CEO Lip-Bu Tan — citing Intel’s need for a long-term strategic reset — acknowledged on the Q1 earnings call that there are “no quick fixes” for the company’s issues.
Among these concerns is the increasingly volatile geopolitical landscape. With U.S. and global trade policies in flux, regulatory uncertainties, and inflationary pressures, the probability of an economic slowdown or recession has grown. Intel recognizes that while its global and diversified manufacturing footprint offers some protection against tariffs and supply chain disruptions, cost pressures are mounting. Moreover, the total addressable market (TAM) will contract, adding to the headwinds.
Weak Guidance Reflects Caution
The cautious outlook is reflected in Intel’s guidance for the second quarter. The company projects revenue to fall within a wide range of $11.2 billion to $12.4 billion, a sequential decline of between 2% and 12%. The company’s Data Center and AI (DCAI) group is expected to see a sharper drop than its Client Computing Group (CCG), and Intel Foundry Services will likely report lower revenue due to reduced wafer and packaging volumes and ongoing capacity constraints with Intel 7 technology. Gross margins, meanwhile, are projected to come in at approximately 36.5%, reflecting the combined impact of lower revenues and weaker margins in its client segment.
While Intel faces challenges, it is taking steps to rein in costs and refocus its capital. Intel plans to cut an additional $2 billion from its growth capital expenditures (CapEx), bringing the total CapEx target for the year down to $18 billion. It’s also evaluating its current manufacturing footprint, ensuring every dollar spent adds efficiency to its operations.
In addition to cost-saving initiatives, Intel is doubling down on its product strategy, specifically around artificial intelligence (AI). The company is reshaping its product roadmap to align with the future of computing, which increasingly revolves around AI agents and reasoning models. By pivoting its focus toward emerging AI workloads, Intel hopes to remain relevant and regain competitive ground lost to rivals.
Still, transforming a company as large as Intel is neither quick nor easy. INTC’s business remains capital-intensive, and investments are critical to long-term growth. To support this, Intel plans to monetize non-core assets, including its stake in Altera, now backed by private equity firm Silver Lake. Additionally, the company has decided against spinning off Intel Capital. Instead, it will focus on monetizing existing investments while being more selective with new ones that directly support its core strategy.
These moves reflect a broader effort to strengthen Intel’s balance sheet and begin the process of deleveraging.
Investor Caution Remains Warranted
While Intel plans to turn around the company, the execution will take time, and there are no guarantees. Broader industry pressures remain ever-present, from macroeconomic uncertainty and cyclical slowdowns to inventory adjustments and fierce competition in both consumer and enterprise markets. Wall Street knows it. For now, most analysts remain cautious, maintaining “Hold” ratings on the stock.
Conclusion: Intel Stock Is a Risky Bet for Now
With significant uncertainties still hanging over the company’s future and a turnaround that is likely to unfold over years, not quarters, investors should avoid INTC stock.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
