Intel shares plummet 8% as investors question CEO's comeback plan

Intel's ambitious comeback plan, spearheaded by CEO Lip-Bu Tan, faced a harsh reality check this week as the chipmaking giant's shares tumbled by 8%, reflecting deep investor skepticism about the company's path to recovery.

The sharp decline came after a mixed Q2 earnings report and signals from Tan that emphasize cost reduction and a more cautious approach to new manufacturing projects, sparking concerns that Intel might be sacrificing its technical leadership.

Earnings report

While the company's revenue of $12.9 billion surpassed analyst consensus, it reported an unexpected net loss of $2.9 billion, largely due to significant restructuring charges. This loss, coupled with an adjusted loss of $0.10 per share, fell short of Wall Street's expectations for a profit.

The PC division delivered $7.9 billion in sales, exceeding consensus, and data center revenue came in at $3.9 billion, also above expectations. The foundry segment, a key part of Intel's long-term comeback plan to produce chips for external clients, recorded $4.4 billion, in line with estimates, but posted a staggering $3.17 billion operating loss.

Slow down? Not so much

Investors were particularly unnerved by Tan's announcement of a more measured approach to Intel's advanced manufacturing processes, specifically the 14A node. He indicated that full-scale 14A production would not commence until sufficient customer demand is secured, a departure from the aggressive, "build it and they will come" strategy of his predecessor, Pat Gelsinger.

This shift, according to Bloomberg, triggered a sell-off, marking Intel's largest single-session decline in over a quarter-year.

Lip-Bu Tan, who took the helm in March, has been candid about the challenges facing Intel, stating that the company had "invested too much, too soon without adequate demand."\

His aggressive restructuring initiatives include a 15% reduction in the global workforce, canceling planned chip factory projects in Germany and Poland, and slowing down construction at the Ohio site. The company projects approximately $18 billion in capital investment for new fabrication sites and machinery in 2025, with less spending next year.

While these cost-cutting measures aim to stabilize Intel's balance sheet, some analysts and investors worry that such a cautious approach could further delay Intel's ability to catch up with rivals like Nvidia and AMD, especially in the booming AI chip market.

Intel's current strategy appears to be a retreat from directly competing in the most lucrative segments of AI training, focusing instead on AI inference and "agentic AI."

Looking forward

The market's reaction suggests that while Tan's focus on fiscal discipline is acknowledged, investors require clearer evidence of operational improvements and a more competitive product roadmap to regain confidence in Intel's turnaround story.