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Yahoo
31-07-2025
- Business
- Yahoo
This Is the Best Reason to Invest in Intel Now. And It Might Be the Only One.
Key Points Following a CEO change, Intel posted another lackluster quarter with flat revenue and a loss. The company is scaling back operating costs and capital expenditures. The broader AI boom gives the company a shot at a recovery. 10 stocks we like better than Intel › Intel (NASDAQ: INTC) changed its messenger, but the message stayed the same. After pushing out CEO Pat Gelsinger and bringing in Lip-Bu Tan, the former CEO of Cadence Design Systems, to run the company, the legacy chipmaker reported another disappointing quarter last week in Tan's first full quarter as the CEO. The stock finished down 8.5% on the news. Revenue in the quarter was flat at $12.9 billion, though that was well ahead of the consensus at $11.9 billion. Revenue in the PC-focused Client Computing Group fell 3% to $7.9 billion, while Data Center and AI was also weak, up just 4% to $3.9 billion. Foundry, its other core business, reported revenue up 3% to $4.4 billion. Some segments have overlapping revenue, leading to $4.4 billion in intersegment eliminations. After it announced a goal of cutting 20% of its workforce in April, Intel said it had achieved a workforce reduction of about 15%, and is aiming to cut non-GAAP (generally accepted accounting principles) operating expenses to $17 billion for the year. Those cost cuts weren't enough to save the bottom line as gross margin tumbled again, falling from 38.7% to 29.7 % due to an $800 million non-cash impairment for accelerated depreciation related to tools with no reuse potential and $200 million in one-time costs. Those charges reduced gross margin by 800 basis points, meaning it would have fallen just 100 basis points without them. On the bottom line, Intel reported an adjusted loss per share of $0.10, down from $0.02 in the quarter a year ago, and below expectations of $0.01 per share. Without that impairment, the company would have reported an adjusted profit of $0.10 per share. Intel is scaling back its ambitions A theme of the report was right-sizing the business in order to meet demand, rather than investing ahead of demand. On the call, Tan summed up this strategy, saying, "I do not subscribe to the belief that, 'If you build it, they will come.' Under my leadership, we will build what customers need, when they need it, and earn their trust, through consistent execution." In line with that thinking and in addition to the layoffs and targeted reduction in operating expenses, Intel is also aiming to reduce its capital expenditures to $18 billion for the year. That includes abandoning projects in Germany and Poland, and consolidating assembly and test operations in Costa Rica into larger sites in Vietnam and Malaysia. It also said it would slow the pace of construction at a new foundry in Ohio to ensure spending on it matches demand. Due to a pull-forward effect from tariff fears, the company also expects the second half of the year to be below the seasonal level. In its third-quarter guidance, it called for revenue of $12.6 billion to $13.6 billion, a slight decline at the midpoint, and it sees break-even EPS. Intel's 18A process may be its most consequential project, and one that Intel bulls had hoped will drive profitability in the foundry unit, opening it up to third-party customers and potentially making it competitive with TSMC. Intel began the start of production wafers at its plant in Arizona in the quarter, a key milestone. Tan said 18A is the foundation of the next three generations of Intel client and server products and the company is committed to fully scaling the technology. Can Intel turn it around? While Tan deserves some time to execute a turnaround, for which cost-cutting is the first step, the struggles are only magnified when you compare Intel to its peers. Virtually every semiconductor stock is thriving in the current AI boom, which has been the biggest windfall in the sector arguably since the dot-com era. Not only is Intel unable to grow right now, it's unable to do so at a time when demand for all things AI is soaring. Peers like Nvidia, AMD, and Micron are all seeing strong growth, and even stocks of legacy tech companies like IBM and Oracle have soared lately on excitement for their AI-related products. While Intel is facing myriad challenges and has been unable to turn a profit, it may only take one success to rewrite the narrative in the stock. For now, though, that still seems elusive, and a downturn in the industry would set back its turnaround hopes even further. At this point, Intel needs to show evidence that a turnaround is underway before it's investable, but the frothiness in the chip sector and the broad market offers some upside if the company can take the first step toward recovery. 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The Motley Fool has positions in and recommends Advanced Micro Devices, Cadence Design Systems, Intel, International Business Machines, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy. This Is the Best Reason to Invest in Intel Now. And It Might Be the Only One. was originally published by The Motley Fool
Yahoo
29-07-2025
- Business
- Yahoo
Intel gets a boost from AI-enabled PCs as its foundries flounder
This story was originally published on CIO Dive. To receive daily news and insights, subscribe to our free daily CIO Dive newsletter. Dive Brief: Intel leaned on its PC and server division to offset losses in its foundry unit during the second quarter, executives said during a Thursday earnings call. The chipmaker reported $2.1 billion in operating income for its Client Computing Group segment and over $3 billion in operating losses for Intel Foundry in Q2 2025, which ended June 28. Revenue growth at the troubled legacy tech provider remained flat year over year for the second consecutive quarter even as its Data Center and AI unit revenue increased 4% to $3.9 billion and Intel Foundry grew 3% to $4.4 billion. Client Computing Group, which includes PC chipsets and processors, was the company's largest revenue generator despite a 3% year-over-year decline to $7.9 billion. The second quarter saw Intel initiate a major overhaul launched when industry veteran Lip-Bu Tan was appointed CEO in March. 'We are implementing a plan to reduce our headcount by approximately 15%, and we plan to end the year with a global workforce of about 75,000 employees,' Tan said in a Thursday letter to employees. A significant number of cuts, which included a 50% reduction in management layers, were completed in Q2, said Tan. Dive Insight: As the AI adoption race became a sprint last year, Intel quickly lost ground. The 57-year-old company ceded its leading position as the semiconductor industry's top revenue generator to Nvidia and fell into the third spot behind Samsung Electronics last year, according to Gartner. The shift was largely due to surging demand for graphics processing units to fuel a global AI infrastructure building boom and a spike in the memory chip market, Gartner VP Analyst Gaurav Gupta said in the report. While Intel held onto its dominant market position in central processing units that power traditional compute, the company overextended its manufacturing ambitions, Tan told investors Thursday. 'The capacity investments we made over the last several years were well ahead of demand and were unwise and excessive,' Tan said. 'I do not subscribe to the belief that, 'If you build it, they will come.' Under my leadership, we will build what customers need, when they need it, and earn their trust through consistent execution.' The company canceled plans for plants in Germany and Poland, slowed construction on an Ohio facility and will shift the assembly and testing operations to Vietnam and Malaysia from their current location in Costa Rica, Tan said. The Ohio manufacturing plant was one of several sites included in a $7.86 billion CHIPS and Science Act grant to Intel finalized in November, just days before CEO Pat Gelsinger retired and handed the reins to Tan's predecessors, interim co-CEOs David Zinsner and Michelle Johnston Holthaus. The federal grant was also directed toward Intel buildouts in Arizona, New Mexico and Oregon. As Intel restructured its foundry division, the sluggish PC market regained traction during the first half of the year. Shipments increased 4.4% year over year during the second quarter, fueled by enterprise demand and shifts in U.S. trade policy, according to a Gartner report published earlier this month. 'PC shipments are forecast to rise 2.4% in 2025, propelled by a tariff-driven front-loaded inventory surge in the first half of 2025 in the U.S. and ongoing Windows 11 replacement cycles,' Gartner Research Principal Rishi Padhi said in the report. Lenovo, HP and Dell, which together command almost two-thirds of the PC market globally, were among the major suppliers that deployed Intel's AI-capable Core Ultra processors in products last year. In December, Intel expanded its AI processor portfolio with enterprise-grade Arc GPUs and accelerator chips. Further AI upgrades are in the works, according to Tan. 'In the past, we approached AI with a traditional silicon and training-centric mindset without a cohesive silicon systems software stack and strategy,' he said. 'We recognize the need to move up the abstraction stack into system and software. This is the area where Intel has traditionally been weak or entirely absent.' Recommended Reading Few employees are confident in their generative AI abilities Melden Sie sich an, um Ihr Portfolio aufzurufen.
Yahoo
25-07-2025
- Business
- Yahoo
Intel Q2 EPS Misses, Revenue Flat at $12.9?Billion
Intel (NASDAQ:INTC) served up mixed Q2 results with a flat $12.9 billion revenue beat the $11.88 billion consensus but adjusted EPS of ?$0.10 missed the $0.01 estimate as $1.9 billion in restructuring, $800 million impairments and $200 million one?offs weighed. Warning! GuruFocus has detected 7 Warning Signs with INTC. The Client Computing Group pulled in $7.9 billion (?3% Y/Y vs. $7.29 billion estimated), Data Center & AI dipped 4% to $3.9 billion (vs. $3.73 billion estimated), while Foundry revenue rose 3% Y/Y to $4.42 billion (vs. $4.39 billion estimated). CEO Lip?Bu Tan says Intel's laser?focused on shoring up its product lineup and AI roadmap and building a financially disciplined foundry, with 18A wafers now rolling at its Arizona fab and Panther Lake CPUs set to ship later this year. CFO David Zinsner adds cost cuts and asset monetizations are strengthening the balance sheet. Looking ahead, Intel sees Q3 revenue of $12.6 billion$13.6 billion (midpoint $13.1 billion vs. $12.64 billion estimated) and EPS of $0.00 (vs. $0.04 estimated). Why it matters: Foundry gains hint at a turnaround in a longtime drag, but near?term profitability depends on successful restructuring. Investors will be eyeing Q3 guidance and execution on 18A ramp. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
