‘Turnaround Requires Patience,' Says Bank of America About Intel Stock
Intel (NASDAQ:INTC) has made its turnaround efforts a top priority, but for investors eagerly awaiting results, the comeback story has yet to take shape.
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That said, the recent appointment of Lip-Bu Tan as the new CEO has been greeted with enthusiasm as the new man at the helm is considered a sound choice.
Tan also made a good impression during his keynote at the annual Intel Vision event last week in Las Vegas. Bank of America analyst Vivek Arya noted Tan's tone as 'generally more realistic and long-term focused, versus prior upbeat and overpromising mgmt. style.'
Led by Tan, the new leadership team is committed to improving transparency in communication with both customers (OEMs/ODMs) and shareholders. Importantly, says the 5-star analyst, Intel recognizes the challenges it currently faces and views its turnaround as a long-term process rather than a quick fix. While management has largely withheld specific details about its upcoming plans, Arya says 'Execution will remain key in its multi-year journey to reshape the company.' Tan's comments also put a renewed emphasis on revitalizing the company culture and once again attracting top talent.
Although the Vision 2025 event centered on Intel products, no new product announcements or roadmap updates were made. Instead, management emphasized fulfilling near-term commitments in PCs and servers while expanding into adjacent markets such as edge/IoT and automotive. In the data center space, Intel expects AI spending will grow from $234 billion in 2024 to $514 billion by 2027, reflecting a 30% CAGR. However, Arya notes that the company currently lacks a 'competitive AI portfolio,' as its existing 'Gaudi3' is only on par with Nvidia's H100 from 2022. Furthermore, its next-gen 'Jaguar Shores' product is not expected until late 2026 or 2027, by which time Nvidia will be ramping its Rubin platform.
Intel also reaffirmed that its long-anticipated 18A process node remains on schedule for high-volume manufacturing with the Panther Lake (PC) product in the second half of 2025. However, the real product ramp and financial impact will only take place in 2026.
While Arya likes Intel's new look, many aspects remain in the air, and investors should prepare for the turnaround to take some time.
'Overall,' Arya summed up, 'we believe Intel is heading toward the right direction, with an improved opportunity for a turnaround under Lip-Bu's leadership. However, there still remain many hurdles to overcome as a subscale IDM/foundry, with increasing competitive pressure on core x86 business (from AMD and ARM) amid quickly changing demand landscape in AI.'
Bottom line, Arya assigns a Neutral rating for Intel shares, along with a $25 price target. Shares could appreciate by ~26% should the analyst's thesis play out in the coming months. (To watch Arya's track record, click here)
That take is not far off the Street's general view on INTC; based on a mix of 27 Holds, 4 Sells and 1 Buy, the stock claims a Hold (i.e., Neutral) consensus rating. The average price target stands at $23.11, implying shares will surge ~16% over the next 12 months. (See INTC stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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