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Amid intense competition in the semiconductor industry, Intel Corporation INTC fell short of expectations and lagged its peers. However, with Lip-Bu Tan being appointed as its new CEO, can Intel be the year’s top turnaround stock, and an enticing buy? Can its shares scale upward consistently after falling to levels touched in 1997? Let’s explore –
Good News for Intel Investors as Lip-Bu Tan Steps In
For some time, Intel’s manufacturing business has been struggling, and the company remains a minor player in the artificial intelligence (AI) semiconductor market. Intel’s shares haven’t fared well over the past year, falling 47.8%, as its previous CEO, Pat Glesinger, failed to boost the company’s product lineup.
However, Lip-Bu Tan’s appointment as the CEO of Intel, effective March 18, has been well-received by Wall Street. Intel’s shares gained more than 10% in the extended trading session, following the appointment as investors remained optimistic about Tan’s capability to restore stability at Intel and return the company to its past glory as a chip leader.
This is because Lip-Bu Tan’s stint in the semiconductor industry has been fruitful. When he played the role of the CEO of Cadence Design Systems from 2008 to 2021, he helped the company increase its operating margins, doubled its revenues, and boosted the stock price by almost 2,700%.
Moreover, Tan is not new to Intel’s proceedings since he served its board before stepping down in August. Tan plans to make the company engineering-focused and spin-off assets that are not part of the company’s core mission.
Tan intends to deliver a competitive AI platform following the failure of Intel’s Falcon Shores AI accelerator. Intel is developing Jaguar Shores, a next-generation AI accelerator for the data center market to stay competitive in the AI race.
Tan also aims to streamline operations through cost-cutting measures, enhance the balance sheet, and align manufacturing processes with customers’ needs.
More Reasons to Be Bullish on Intel Stock
A lot is happening with Intel that may strengthen its foundry business. Taiwan Semiconductor Manufacturing Company Limited TSM, or TSMC, may buy some stake in Intel’s foundry business. The increasing demand for AI chips is driving growth in the foundry business and TSMC’s chip fabrication leadership. Thus, the new deal could benefit Intel in the long run.
By the second half of 2025, Intel intends to launch the Panther Lake central processing unit (CPU), which uses the 18A process node. The 18A has also been made available to external customers such as Amazon.com, Inc. AMZN and Microsoft Corporation MSFT, a tactical move to boost the foundry business. Intel, anyhow, continues to be a dominant player in the PC CPU market.