So, Intel’s getting a bit of a haircut. And by “bit of a haircut,” I mean they’re planning to chop off a few thousand jobs in hopes that the corporate edition of “Addition by Subtraction” can jumpstart its role back into the tech race. Oh boy… 

(Source: Bloomberg) 

According to recent reports, while Intel has seen mixed earnings in 2024 with a declining stock price (down -36.10% YTD), our boy Pat Gelsinger is spearheading this mission to right his predecessors wrongs. 

(Source: Giphy) 

Gelsinger, who took over Intel’s CEO reigns in 2021, is looking to take the extra cash flow he gets from thousands of American families and heavily invest it into R&D, building new plants, and getting Intel back in the ring with the heavyweights like Nvidia and AMD. 

(Source: Pinterest) 

Which on the surface is smart, considering most Intel investors have been punching air this year as the stock has been losing market share faster than Kanye loses his dignity. 

In short, while Intel executives were satisfied with being the Beyonce of chips pre-Nvidia, it ultimately led to laziness. Allowing competitors like AMD and Nvidia to sweep in like vultures, snatch up market share with their AI-centric semiconductors, and leave Intel looking like it just brought a knife to a gunfight. 

(Source: PC Games) 

So as a result, Intel has finally decided to wake up from its lost slumber with one thing to blame: It’s workforce. This has Intel officially slimming down its employment from around 110,000 employees – in order to save north of $10 billion by 2025. And while that sounds like a lot, in the semiconductor world, it’s barely enough to cover the cost of innovation these days.

(Source: Giphy) 

This massive reduction in jobs is also set to make room for Intel’s foundry business as it’s already taken funding from private equity players like Apollo and other government subsidies to push their Gaudi 2 and next-gen Gaudi 3 accelerators (hoping to give Nvidia and TSMC a run for its money). 

(Source: Motley Fool) 

But even with the extra room, Nvidia’s H200 chip is the Usain Bolt of semiconductors right now. Meaning it’s going to take much more time in the “think tank” for Intel to catch up besides just saying it’s overweight in employment costs.  

(Source: Giphy) 

For this reason, analysts are predicting that Intel’s revenue will remain flat for the second quarter. Not exactly the kind of news that makes investors pop champagne. However, there’s a glimmer of hope: projections suggest a modest 3% revenue increase for the full year. Now of course, a 3% revenue increase isn’t exactly “make it rain” territory, but hey, it’s something. 

(Source: Morningstar) 

So, given all of this, will Intel’s grand plan work? It’s both risky and uncertain. Some investors are cautiously optimistic, while others are clutching their pearls, worried this could be a disaster in the making. The truth is, only time will tell if Intel can pull off this comeback. 

(Source: Giphy) 

But regardless, you gotta hand it to Gelsinger. He’s set to be the main target on thousands of dart boards in America, and yet, he’s still willing to drop the guillotine in hopes of turning things around. So even though the layoffs are painful (and a massive tax form headache), they might just be the tough love Intel needs to get back on top.

So with that said, what’s the takeaway here? Well simply put, keep an eye on Intel’s stock. With a nice closing of +1.99%, Intel still has quite a ways to recover from its -30% YTD downfall, but if you’re a dip buy investor, this news may just be your cue to execute. 

As always, I have no idea what I’m talking about and don’t take financial advice from me. But while some Intel investors are gripping their stress balls for dear life right now, there may be a light at the end of the tunnel for Intel with a tough nut like Gelsinger in charge. 

 

(Source: Giphy) 

Stocks.News holds positions in Intel as mentioned in the article.