Intel Stock Forecast: Can INTC Bounce Back After Layoffs and Weak Earnings Expectations?

Intel Corp Intel is under the spotlight this week as the chip giant prepares to report earnings amid massive layoffs, a historic financial downturn, and intensifying AI competition from Nvidia and AMD. Investors and analysts are watching closely to see if Intel can stabilize and reinvent itself in the rapidly evolving semiconductor landscape.

Intel Earnings Preview

Intel is set to release its Q2 earnings today, with Wall Street expecting revenue of $11.97 billion and EPS of just $0.01. These are modest figures for a company once seen as the king of processors, but Intel is facing its biggest crisis since 1986, closing 2024 with a $18.8 billion annual loss, the first in nearly four decades.

The backdrop to these financial woes is Intel’s massive $10 billion cost-cutting program, including over 15,000 layoffs already, suspension of its dividend, and potential additional cuts being disclosed in this report. This wave of layoffs, with another 5,000 cuts primarily in California and Oregon, underscores the depth of Intel’s restructuring efforts.

Can Intel Catch Up?

While Nvidia, AMD, Samsung, and TSMC dominate the AI revolution, Intel has struggled to keep pace. The demand for new, AI-optimized architectures is moving away from Intel’s traditional business model, forcing the company to reinvent its strategy.

Analysts, including KeyBanc’s John Vinh, have noted stable demand in PC and server CPU channels, with continued strong server demand potentially leading to an earnings surprise. Intel still holds a strategic advantage with its x86 architecture, which remains foundational for most PCs and servers globally, representing an underleveraged asset in Intel’s arsenal.

Another key issue for Intel is its foundry unit, established in 2021 to serve external clients like Amazon and Qualcomm alongside internal chip production. Rather than becoming a growth engine, the unit posted a $7 billion loss in 2023. This has been a significant drag on Intel’s bottom line and a point of concern for shareholders.

However, Intel received a small victory this week when a federal judge dismissed a shareholder lawsuit claiming the company hid issues within its foundry unit, which allegedly contributed to its $7 billion loss. The judge ruled that Intel was sufficiently transparent about the unit’s challenges.

Intel has yet to recover from last August’s shock, when the stock plunged 26% in a single day following the dividend suspension and layoff announcements. This dramatic drop highlighted the deep disappointment of investors who have relied on Intel for years.

Today earnings and management commentary on layoff scale, cost-cutting progress, and AI strategy could determine whether Intel stabilizes or continues to struggle in the shadow of its competitors.

Ready for Intel Next Move?

The earnings report is a crucial checkpoint for Intel and the future of Intel Corp in the semiconductor and AI landscape. With layoffs expanding, a fragile financial position, and strong but underleveraged assets like its x86 architecture, Intel has a narrow but critical path to regain investor confidence.

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