Intel seems to be that one-time accidental topper of the classroom who’s now hardly passing the exams. Even with its heritage and enormous influence in the technology landscape, the company has consistently faded when it comes to keeping up with the fast-paced AI-centered chip race. While one hopes that the company will somehow pull through with financial discipline and new chip launches, one indeed recognizes that it lags much behind more nimble players like Nvidia and AMD. In their parallel deliberation, it is a case of “hold”, or perhaps no one is sure that Intel can get its act together yet.
Intel’s latest numbers portray a clouded image. A Q2 revenue beat wasn’t sufficient to protect the stock’s 8% decline, due to a surprise adjusted loss of $0.10 per share. This is significantly lower than the conservative $0.01 profit that was expected by analysts. That’s a large miss for a company attempting to reassure the investor community about its plan.
The actual problem is that Intel has taken its sweet time to catch up with AI, whereas its competitors are riding high on the surging demand for AI and data center offerings. Its margin squeeze, expensive restructuring, and emerging foundry plans have only put more pressure. Even its Q3 revenue guidance is thoughtful, and its full-year projections indicate deeper losses. Out of 39 analysts 33 are keeping their fingers crossed with a “Hold” rating.
Intel still has worthwhile infrastructure and significant government tie-ups. There is a possibility that when its new chip technology (such as the 18A process) and foundry investment takes hold, it might become a tough competitor again. However, there is also a possibility that the company’s lost ground will not catch up. As opponents have already taken the lead in AI and advanced chip design, Intel’s revamp may come too late.
Hopeful investors looking for a dramatic turnaround need to keep expectations humble and timelines far off. While modest upside exists at these prices from Wall Street’s perspective, what really matters is whether Intel can transform quickly enough in an AI-powered world or not.