During a recent segment on “Bloomberg Technology,” Matt Bryson, an equity research analyst from Wedbush, discussed the current state and future prospects of Intel (INTC) following the chipmaker’s latest earnings report. Despite Intel posting better-than-expected earnings, the company has warned of a challenging first quarter ahead, leading to a drop in its share price and raising questions about its strategic direction.
Bryson commented on the more tempered outlook from Intel’s interim CEO, suggesting that this realistic approach could be beneficial after years of overly optimistic forecasts under former CEO Pat Gelsinger that had ultimately disappointed investors. This shift to setting a more achievable bar is seen as an attempt to regain investor trust through solid execution rather than lofty promises.
The pivotal question, according to Bryson, is what Intel’s strategy will be moving forward. Under Gelsinger, Intel aimed to rejuvenate its manufacturing capabilities to compete more effectively. However, with no new CEO announced, the path forward remains uncertain. Bryson pondered whether Intel would maintain its current strategy or if it might consider a restructuring similar to what Advanced Micro Devices (AMD) did, potentially transforming into a chip design company and spinning off its manufacturing arm. This uncertainty about Intel’s future strategy is seen as a significant factor in its current market perception.
On the topic of Intel’s competitiveness, particularly in the server chip market where data centers are expanding, Bryson highlighted two key areas. Firstly, the success of Intel’s new manufacturing process, known as 18A, which is slated to ship this year. If these chips are competitive, it could mark a significant turnaround for Intel, especially after their manufacturing missteps nearly a decade ago. Secondly, Intel’s lag in the AI chip market, where competitors like Nvidia (NVDA), Broadcom (AVGO), Marvell (MRVL), and AMD have seen growth. Intel’s recent offerings, like the Gaudi chip, have not met expectations, and their upcoming product, Falcon Shores, is described more as a test rather than a market-ready solution.
Lastly, addressing the massive $20 billion investment in new manufacturing plants, Bryson was cautious about predicting government support, noting the unpredictable nature of current U.S. administration policies. He refrained from speculating on how the Trump administration might view such investments, indicating that for Intel’s sake, continued support would be beneficial, but no one can predict the political landscape’s impact on business decisions.
This discussion underscored the complexity of Intel’s position in the semiconductor industry, where strategic decisions, technological execution, and political support play crucial roles in determining its future trajectory.
Price Action: Intel’s stock had another rough day on Friday, closing down $0.58 or 2.90% at $19.43. The company, which boasts a market cap of $83.8 billion, has seen its stock lose 16.25% over the past 3 months and a whopping 54.4% on a year-over-year basis.
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