Intel (INTC.US) shares are down 6.5% on weaker-than-expected guidance for the second quarter of 2025, despite beating the revenue and EPS estimates. The earnings marked the first report under new CEO Lip-Bu Tan, and while Q1 showed signs of progress, investors and analysts were largely unimpressed by what lies ahead.ย
ยFIRST QUARTER RESULTS
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Revenue: $12.67 billion (-0.4% YoY; est. $12.31 billion)
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Intel Products revenue: $11.76 billion (-2.9% YoY)
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Client Computing revenue: $7.63 billion (-7.8% YoY)
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Datacenter & AI revenue: $4.13 billion (+7.8% YoY)
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Adjusted EPS: $0.13 (vs. $0.18 YoY; est. $0.0074)
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Adjusted gross margin: 39.2% (vs. 45.1% YoY; est. 36.1%)
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Adjusted operating margin: 5.4% (vs. 5.7% YoY)
SECOND QUARTER FORECAST
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Revenue: $11.2 billion to $12.4 billion (est. $12.88 billion)
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Adjusted EPS: $0.00 (est. $0.072)
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Adjusted gross margin: 36.5% (est. 37%)
Intelโs performance stagnated after recovering miserable Q3 2024. Source XTB Research
ยProducts remain under pressure
Intelโs Q1 earnings beat was driven by front-loaded demand in the Client Computing Group (CCG) and Data Center and AI (DCAI) segments ahead of potential tariffsโnot by sustained, organic momentum. This raises concerns about the durability of that performance, especially given Intelโs weaker-than-expected guidance for the June quarter.ย
Meanwhile, its core products in PCs and traditional servers continue to stagnate. The company is steadily losing server CPU market share to AMD, reflecting an inability to keep pace with more competitive offerings. With AI-related growth increasingly flowing to rivals, Intelโs legacy platforms appear ill-equipped to regain relevance.
ยRestructuring meets skepticism
New CEO Lip-Bu Tan has initiated a bold cultural reset aimed at breaking Intelโs bureaucratic inertia. In a company-wide memo, he called for streamlining decision-making, slashing meetings, removing unnecessary management layers, and increasing in-office collaboration.
The measures are part of a wider restructuring effort that includes layoffsโpotentially exceeding 20% of the workforceโtied to a $500 million cost-cutting goal in 2025 and a further $1 billion in 2026. While the changes may improve internal efficiency, analysts remain doubtful theyโll be enough to offset Intelโs competitive challenges or reverse long-term market share erosion.
The stock has been unable to break out of the ongoing consolidation, currently back where it started after August sell-off. Source: xStation5
