Intel's Strategic Focus Amidst Declining Stock Prices

Intel Corp. (INTC) recently discussed its strategic priorities for 2025 during a meeting with Citi Research analyst Christopher Danely. The key areas of focus include enhancing the company’s ambitions in artificial intelligence (AI), addressing ongoing CPU manufacturing challenges, and the upcoming appointment of a new CEO.

Recent Developments: As part of the leadership transition, David Zinsner and Michelle Johnston Holthaus have been appointed as interim co-CEOs since December 2, 2024. This change followed the retirement of former CEO Pat Gelsinger, who had been with Intel for over 40 years and stepped down from the board.

Citi Research, in its report dated January 9, 2025, emphasized the urgent agenda for Intel in the new year. Top priorities include refining the product roadmap, improving CPU manufacturing efficiency, and establishing a significant presence within the AI sector. The report also mentioned Intel's plans to streamline operations in hopes of reclaiming market share in the CPU industry by 2025.

The search for a permanent CEO appears to be progressing, with Citi projecting that an announcement could come within a couple of months. The firm's rating on Intel remains 'Neutral,' and the price target has been upheld at $22 per share, reflecting the valuation set on November 26, 2024.

The Bigger Picture: Intel’s market capitalization has noticeably lagged behind that of its key competitors. Currently, Intel’s value stands at $85.7 billion, while Qualcomm Inc. (QCOM) has a market cap of $176.7 billion. Notably, Advanced Micro Devices Inc. (AMD), Intel's major rival, exhibits a market cap more than double that of Intel, sitting at $197.7 billion. The leading force in the semiconductor sector, Nvidia Corp. (NVDA), boasts an impressive market cap of $3.43 trillion, highlighting a significant valuation gap within the industry.

Moreover, Intel has faced consistent performance challenges with its 13th and 14th-generation processors. In August 2024, the company announced a plan to reduce its workforce by 15%, translating to about 15,000 positions, despite receiving $8.5 billion in grants from the U.S. government.

Market Performance: Intel’s stock has shown lackluster performance, dropping by 0.4% in premarket trading recently. Over the past six months, the stock has plummeted by 42.99%, and over the past year, it has experienced a decline of 58.12%. In contrast, the Nasdaq 100 has performed considerably better, recording gains of 2.45% in the last six months and 26.13% over the past year.

Currently, about 31 analysts are monitoring Intel's performance, and a consensus rating of "sell" has been established, with an average target price of $30.23 for Intel shares. The three most recent recommendations from analysts at BofA Securities, Northland Capital Markets, and Mizuho suggest a price target of $24, which implies a potential upside of 20.85%.

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