Chip stock Intel (INTC) recently revealed how its program of cost cutting has been going, and by some measures, things have gone almost shockingly well. Some reports suggest that Intel has pared back its total layers of management by half, or possibly more. That was good enough for investors, meanwhile, who sent shares surging up over 3% in Friday afternoon’s trading.
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Intel’s corporate vice president of corporate planning and investor relations, John Pitzer, recently offered up a rather blunt assessment of Intel’s cost cutting efforts, noting that the overhaul was almost as focused on changing Intel’s culture as it was dealing with technological issues. Pitzer noted that, before Lip-Bu Tan got involved, Intel had “…11 or 12 layers of management.” That is clearly unnerving, but Pitzer stepped in, noting, “We’ve now taken that down to five or six.”
This is also a move reflected in Intel’s product development cycles, particularly with Diamond Rapids. Intel pared several chips off the road map altogether, particularly the lower-end models. This might be a problem—some lower-end presence allows Intel to pursue the budget chip market—but with Intel cutting products that were less-than-competitive on cost and performance, it makes sense.
A Boost for Linux
Further good news arrived for Intel as Linux users looking to power their rigs with Intel hardware got some support. Reports note that Intel NPU driver support is now available, which will allow Linux users to access the CPU accelerator for AI operations. Reports note that those taking advantage of this will need OpenVINO software, which is an Intel product.
One of Intel’s innovators, Alessandro de Oliveira Faria, noted, “With the arrival of NPU (Neural Processing Unit) devices, it has become possible to run LLMs and generative AI applications without relying on a dedicated GPU.” Further, Faria noted, “As members of an open-source community, we have a responsibility to democratize emerging technologies and help reduce the digital divide, and this delivery is another important step in that direction.”
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on three Buys, 25 Holds and six Sells assigned in the past three months, as indicated by the graphic below. After a 93.59% rally in its share price over the past year, the average INTC price target of $36.07 per share implies 13.6% downside risk.
