Intel (NASDAQ:INTC) CEO Lip-Bu Tan promised plenty of changes when he took the reins of the struggling Silicon Valley pioneer earlier this year.
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In his initial communication with company staff after his appointment by the Board of Directors, Tan wrote that “we are the founders of ‘The New Intel,’” reflecting his grand ambition to remake the company.
Less than one year into his tenure, Tan has been very active. The company has cut jobs, entered into a strategic partnership with Nvidia, and agreed to take on oodles of financing from both the U.S. government and SoftBank.
The market has responded positively all in all, and INTC’s share price is up close to 100% year-to-date.
While he believes the company’s recovery is plenty real, investor Motti Sapir doesn’t see much additional upside in the near term.
“Right now, I think most of the good news is already baked into the price,” explains the investor.
Sapir believes that Tan and company are making many of the right moves. This includes the financing it is receiving from both public and private sources, as well as the selling of stakes in some of its businesses.
Indeed, the focus on Intel’s foundry business could pay off handsomely going forward, notes Sapir. However, like most things, it all comes down to whether Intel is able to deliver the goods.
“I think getting government money and interest from companies … helps but isn’t enough by itself; what really matters is whether Intel can make new technology work and win over customers,” emphasizes Sapir.
The investor will be paying close attention to a few key indicators, including the company’s success in on-time technology launches, its ability to hook major foundry clients, and the continued performance of its PC chips business.
Looking at Intel’s future pathways, Sapir predicts that the most likely scenario will see “slow progress.” Though a bull case is possible, especially if Intel manages to hook a large U.S. cloud customer, Sapir isn’t ready “to bet big right now.”
“I’m sticking with Hold; the easy gains are gone,” concludes Sapir. (To watch Motti Sapir’s track record, click here)
That seems to be where the bulk of Wall Street finds itself as well. With 25 Holds far outweighing 3 Buys and 6 Sells, INTC carries a consensus Hold (i.e., Neutral) rating. Its 12-month average price target of $36.07 points to a downside in the low double digits. (See INTC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.