Intel (NASDAQ: INTC) has experienced a turbulent three-year period, marked largely by declining performance, as the chipmaker struggles to keep pace in a fast-evolving AI-driven semiconductor landscape.
- This extended slump has prompted urgent internal changes, signaling a pivotal moment in the company’s strategic direction.
- Rival firms have capitalized on the AI boom, leaving Intel to confront its competitive shortcomings.
Leadership Shift Signals a New Chapter
In March, Intel’s Board of Directors appointed Lip-Bu Tan as the new CEO, aiming to reinvigorate the company’s prospects.
- Tan is highly regarded for his leadership at Cadence Design Systems, where he oversaw a 3,000% stock price gain from 2009 to 2021.
- His deep industry expertise and turnaround experience are seen as crucial to Intel’s renewal strategy.
Tan has already laid out a vision to reshape Intel into an engineering-centric company, targeting operational efficiency and technological focus.
- His early measures include significant cost-cutting, with up to 20,000 job cuts aimed at streamlining the workforce.
- These actions reflect a bold commitment to revitalizing Intel’s structure in a competitive global market.
Investors See Long-Term Opportunity
Investor Rafa F. Oliver has voiced strong support for the changes, calling Intel a “buying opportunity” under Tan’s leadership.
- Oliver cites Tan’s proven success in the sector and believes similar transformation at Intel is possible.
- He expects Tan’s leadership to unlock shareholder value through strategic execution.
Oliver outlines two distinct value-generating paths for Intel.
- In one, Intel corrects internal inefficiencies and grows in line with peers, potentially boosting the stock by 40%.
- In another, a spin-off of Intel’s foundry business by 2026 could propel the stock by 173%, due to the higher profitability of focused chip design operations.
Foundry Spin-Off Seen as a Catalyst
According to Oliver, Intel’s dual focus on chip design and manufacturing has dragged down margins, creating structural inefficiencies.
- He argues that separating these units would enhance competitiveness and simplify business operations.
- Peer comparisons suggest design-focused firms enjoy stronger profit margins, while hybrid models often fall short in efficiency.
“Design businesses are simply more profitable,” Oliver notes, adding that a pure-play model would better align Intel with market leaders.
Strong Buy Rating Backed by Strategic Vision
Oliver maintains a Strong Buy rating on Intel, urging investors to “scoop up” shares before further transformation unfolds.
- He views the current share price as undervalued, with future growth potential tied directly to executive execution and strategic clarity.
- The investment thesis rests on both internal reform and potential structural separation as powerful levers for shareholder returns.
As Intel pivots under new leadership, market observers are watching closely to see whether Tan can deliver on expectations and steer Intel into a new era of relevance.