Intel’s (INTC) first quarterly report under newly appointed CEO Lip-Bu Tan surprised Wall Street—just not in the way investors had hoped.
The company beat expectations on both earnings and revenue, reporting adjusted earnings per share of $0.13 on revenue of $12.7 billion, well above the consensus forecast of $0.01 on $12.3 billion in sales. Yet the optimism was short-lived. Shares tumbled more than 7% on Friday after Intel issued a second-quarter outlook that came in well below expectations.
Intel said it expects revenue between $11.2 billion and $12.4 billion for the current quarter, versus analysts’ forecast of $12.8 billion. The company also projected it would break even in adjusted earnings per share—well under the seven cents analysts had penciled in. The disappointing guidance was attributed largely to front-loaded customer demand in anticipation of new U.S.-China tariffs, and broader uncertainty in the global economy.
Intel CFO David Zinsner acknowledged the cautious tone: “The current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook.”
Lip-Bu Tan Begins Restructuring Drive
Lip-Bu Tan, who took over as CEO in March, wasted little time signaling deep changes ahead. In a letter to employees and investors, Tan outlined a sweeping cultural overhaul aimed at streamlining operations and improving execution. These changes include reducing layers of management, cutting down on meetings, and increasing the in-office requirement from three to four days a week.
“There are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth,” Tan said.
The restructuring comes amid reports that Intel plans to cut more than 20% of its workforce. The company has already lowered its 2025 operating expense target by $500 million and plans to reduce it by another $1 billion next year. While these cost-cutting measures may provide some relief, analysts remain unconvinced that Intel is poised to regain ground lost to rivals such as AMD (AMD) and Nvidia (NVDA).
Lip-Bu Tan, who took over as CEO in March, wasted little time signaling deep changes ahead. In a letter to employees and investors, Tan outlined a sweeping cultural overhaul aimed at streamlining operations and improving execution. These changes include reducing layers of management, cutting down on meetings, and increasing the in-office requirement from three to four days a week.
“There are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth,” Tan said.
The restructuring comes amid reports that Intel plans to cut more than 20% of its workforce. The company has already lowered its 2025 operating expense target by $500 million and plans to reduce it by another $1 billion next year. While these cost-cutting measures may provide some relief, analysts remain unconvinced that Intel is poised to regain ground lost to rivals such as AMD (AMD) and Nvidia (NVDA).
AI Ambitions Still in Question
Despite a strong showing in its data center and AI segment—posting $4.1 billion in revenue versus an expected $2.9 billion—Intel continues to lag behind in the race for AI dominance. While Nvidia shares rose Friday, buoyed by signs of robust AI demand, Intel struggled to articulate a competitive roadmap.
Despite a strong showing in its data center and AI segment—posting $4.1 billion in revenue versus an expected $2.9 billion—Intel continues to lag behind in the race for AI dominance. While Nvidia shares rose Friday, buoyed by signs of robust AI demand, Intel struggled to articulate a competitive roadmap.
Tan spoke of building “full stack AI solutions” but offered no timeline for the release of a viable product. Intel recently scrapped its upcoming Falcon Shores AI data center chip in favor of a new project dubbed Jaguar Shores. In the meantime, Nvidia and AMD continue to tighten their grip on the AI chip market, with Nvidia alone maintaining a $75 billion capex budget to support cloud AI infrastructure.
Intel’s foundry business—an ambitious effort to rival third-party giants like Taiwan Semiconductor Manufacturing Co. (TSM)—remains unprofitable. Talks between Tan and TSM CEO C.C. Wei about a possible partnership have yet to yield concrete plans. Analysts remain skeptical. “Intel’s core PC and traditional server markets appear ex-growth,” noted Oppenheimer analyst Rick Schafer. “IFS remains unprofitable for the foreseeable.”
Conclusion
Intel’s first quarter earnings beat was overshadowed by a lackluster forecast and strategic uncertainty. While CEO Lip-Bu Tan is pushing for dramatic change, from management reshuffles to cultural transformation, investors remain cautious. Until Intel demonstrates tangible progress in AI and foundry services, the chipmaker's stock is likely to remain under pressure.
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