Intel Corp’s share price increased by 3% ahead of its recent earnings report, even with ongoing financial struggles. This rise shows cautious optimism among investors, who hope for a turnaround under new CEO Lip-Bu Tan and expect important changes in Intel’s core and foundry businesses.
In the first quarter of 2025, Intel reported flat revenue of $12.7 billion compared to last year. However, the company suffered a net loss of $821 million, which is more than double the loss from the same time a year ago.
Gross margins fell from 41% to 36.9% due to a poor product mix, higher startup costs for new manufacturing, and ongoing economic pressures.
Intel’s outlook for the second quarter is not strong. The company expects revenue between $11.2 billion and $12.4 billion, indicating a possible decline of up to 12%. They aim to break even on a non-GAAP basis, which shows continued margin pressure and uncertainty in the industry.
CFO David Zinsner mentioned that some of the first-quarter sales strength came from clients stockpiling chips in anticipation of potential tariffs, a trend that may not continue.
Despite these financial challenges, Intel’s leaders are taking important steps. CEO Lip-Bu Tan, who started in March, is focusing on improving operations, reducing costs, and emphasizing their core engineering skills. The company plans to lower its operating expenses to $17 billion for 2025 and $16 billion for 2026, along with cuts in capital spending.
Intel’s foundry business, which makes chips for other companies, is key to its recovery plan. This segment saw a 7% revenue increase to $4.7 billion, but it still operates at a loss. Investors are watching closely for new partnerships or changes in structure, with rumors about possible deals, including selling a stake or spinning off parts of the business.
While Intel’s stock has lost over a third of its value in the past year, the recent 4% rise suggests that investors see promise in the company’s restructuring efforts and new leadership. However, analysts advise caution, noting that Intel’s size, competition, and ongoing issues in its foundry division mean a complete turnaround will take time.
As Intel faces trade tensions, changing technology needs, and stiff competition, its next moves, especially in foundry operations and cost management, will be crucial for regaining investor trust and achieving sustainable growth.
The upcoming quarters will test Intel’s ability to implement its ambitious plans and restore its position as a leader in the global semiconductor industry.