Intel Corp (NASDAQ: INTC) rallied nearly 15% in after-hours trading on Wednesday after naming Lip-Bu Tan its new chief executive.
Tan has formerly served in a similar capacity at Cadence Design Systems Inc (NASDAQ: CDNS) – a multinational company based out of San Jose, California, that makes software for chip designers, including Intel.
On March 18th, Tan will take the helm from David Zinsner and MJ Holthaus who were appointed interim co-CEOs of Intel in December.
He will also rejoin the board after previously stepping down in August 2024.
Lip-Bu Tan likely has a rough road ahead
Lip-Bu Tan is tasked with steering Intel through a critical transformation.
His primary focus would be on rebuilding the company’s process technology roadmap in pursuit of regaining leadership in semiconductor manufacturing.
Tan will also aim to improve execution, driving innovation, and strengthening Intel’s foundry business to reclaim its competitive positioning in the global market.
All in all, the new chief executive is expected to tap on his vast experience in the semiconductor industry to accelerate Intel’s turnaround, rebuild investor confidence, create shareholder value, and position the company for long-term growth and success.
Note that INTC is currently down more than 50% versus its 52-week high.
Why has Intel struggled in recent years?
Intel has struggled to remain relevant in the fast-growing AI market, losing share to the likes of Nvidia and Advanced Micro Devices (AMD).
Nonetheless, the multinational chip manufacturer surpassed street expectations in its most recent quarter.
However, INTC pointed to intense competition, macroeconomic conditions, and seasonal factors as it provided a cautious outlook for the first quarter.
Intel had also warned in January that the possibility of new tariffs under the Trump administration was resulting in added uncertainty.
President Trump has since turned that “possibility” into a “reality”.
That said, Intel shares currently pay a healthy dividend yield of 2.42% that makes them somewhat more attractive to own in 2025.
Is it worth investing in Intel stock today?
Intel’s new CEO announcement arrives only days after Citi reiterated its “neutral” stance on Intel stock.
Its analyst Christopher Danely is concerned that “there could be an inventory build in CPUs given CPUs grew low double digits in H2 of 2024 while PCs grew mid-single digits.”
Citi now expects PC growth to come in at 4.0% on a year-over-year basis in 2025. The investment firm’s $21 price target on INTC warns of potential downside of about 10% from here.
However, whether or not Citi will choose to change its view on Intel stock following the appointment of Lip-Bu Tan as its new chief executive is yet to unfold.
That said, other Wall Street analysts seem to agree with Citi on the semiconductor stock as well, given the consensus rating on it currently sits at “hold”.
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