You have to give chip stock Intel (INTC) credit for one thing, at least: it is not at all afraid to cut costs. And its plan to cut costs still further is resonating with shareholders, too. Word about Intel’s outlook for full-year costs sent Intel shares on an upward tear, up over 3% in Monday afternoon’s trading.
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Thanks to the sale of Intel’s majority stake in Altera, Intel has a non-GAAP operating expense target of $16.8 billion for fiscal 2025. Given that previous projections called for $17 billion outright, that is a fairly substantial drop. Intel also made clear that earlier projections of $16 billion for fiscal 2026 are unchanged.
This has been part of an ongoing plan for Intel for some time now. Intel is currently, as noted by CFO David Zinsner, “…taking the actions needed to build a more financially disciplined foundry.” Further, Zinsner noted that the changes Intel has made so far are working. Specifically, he noted this about the changes: “…we are making to reduce our operating costs, improve our capital efficiency and monetize non-core assets are having a positive impact.”
Skeptical Analysts
Despite this, some analysts do not look for Intel to come back quickly. Truist Securities analyst William Stein—who has a five-star rating on TipRanks—is leaving his Hold rating in place with a price target of $21. Stein noted that, indeed, Intel has made progress. But progress alone does not fix the kinds of problems Intel had, and only time would tell if progress ever goes far enough to actually turn anything around.
Stein noted: “Recall, we see four important categories for improvement: culture, competitive capabilities, AI strategy, and government / ecosystem engagement. We discussed developments among all of these, and came away slightly encouraged by developments. Still, in our opinion, these improvements are going to take a while…and success is far from certain. No change to our estimates or PT. Hold.”
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 24 Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 15.16% rally in its share price over the past year, the average INTC price target of $22.17 per share implies 10.6% downside risk.
