Even before officially taking office as Intel (NASDAQ:) CEO on 18 March, Lip-Bu Tan outlined ambitious reform plans for the ailing chipmaker. According to insiders, Tan is planning to streamline middle management, increase investment in artificial intelligence (AI) and reorganise semiconductor production.
Middle management, in particular, is expected to be affected by job cuts, which Tan has already announced at an internal staff meeting. Intel did not comment on the plans, nor did it grant an interview with Tan.
Is This the Long-Awaited Breakthrough?
It seems that the buying mood has returned. In any case, the price has risen by around 16% since the announcement of this news.
When we look at the general state of Intel in the KI tool InvestingPro, we can clearly see that there is still considerable uncertainty in the market:
34 analysts see the price as fairly valued at $22.90 on average and the financial health is estimated at 2 on a scale of 1 to 5. High marks look different.
And What About the Charts?
In terms of the charts, we see a very good chance for Intel to finally turn things around. In the following chart, we can see impressively that the price has already tested our target area (purple box) six times. For us, the target area is the ideal range for a turnaround. That’s a good sign, isn’t it?
Yes, because the stock has managed to produce a strong increase from the purple box and has not fallen below $18.78 so far. That is also the prerequisite for a breakthrough upwards.
We expect the stock to now retreat somewhat to the level of the small purple box at $22.85 to $20.81. If it turns up from there and does not fall back below $18.78, we can look forward to a sustained rise as sketched in the chart.
Should the stock fall back below $18.78, however, we will have to plan for a final sell-off to at least $15.11.
AI as a Key Strategy
Tan also wants to strengthen Intel’s position in the growing AI market, where the company lags behind market leaders such as Nvidia (NASDAQ:). In addition to developing AI processors, he plans to win back customers for contract manufacturing. However, experts believe that competitive products will not be available until 2027.
Intel is also struggling with delays in its new production technology ‘18A’, which is supposed to keep pace with competitors like TSMC.
No Clear Change of Course
Although Tan’s plans seem ambitious, they resemble Gelsinger’s strategy in many ways, which also focuses on strengthening contract manufacturing. But with billions in losses and postponed projects, such as the factory construction in Magdeburg, Intel remains under pressure.
The reforms could give the company a new lease of life – or push Intel into a potential takeover situation. Therefore, we do not see a compelling case for buying at this point. However, should the stock confirm the low at $18.78, the paper could become more attractive again.
Disclaimer/Risk warning:
The information provided here is for informational purposes only and does not constitute a recommendation to buy or sell. It should not be understood as an explicit or implicit assurance of a particular price development of the financial instruments mentioned or as a call to action. The purchase of securities involves risks that may lead to the total loss of the capital invested. The information provided does not replace expert investment advice tailored to individual needs. No liability or guarantee is assumed, either explicitly or implicitly, for the timeliness, accuracy, appropriateness or completeness of the information provided, nor for any financial losses. These are expressly not financial analyses, but journalistic texts. Readers who make investment decisions or carry out transactions based on the information provided here do so entirely at their own risk. The authors may hold securities of the companies/securities/shares discussed at the time of publication and therefore a conflict of interest may exist.
