Shares of Intel (INTC 7.94%) are surging on Monday. The company’s stock had gained 6.8% at noon ET and was up as much as 8.7% earlier in the day. The strong performance comes as the S&P 500 index remained flat and the Nasdaq Composite index fell 0.4%.
The chipmaker’s stock is rallying after reports emerged detailing incoming CEO Lip-Bu Tan’s plans for a significant strategic overhaul.
Intel’s New CEO is shaking things up
Reuters reported today that Intel’s incoming CEO, Lip-Bu Tan, is considering sweeping changes that could overhaul the struggling company. Tan plans to shift the company’s approach to artificial intelligence (AI) and make significant staff cuts aimed at addressing a “slow-moving and bloated middle management layer.” Tan told employees last week that the company will need to make “tough decisions,” signaling he will take a more aggressive approach than his predecessor.
As part of the revamp, Tan’s efforts will focus on Intel’s manufacturing operations. The company’s foundry business, which manufactures chips for external clients and has been a source of disappointment in recent years, will aggressively pursue new customers under Tan.
Tan’s AI plans include producing chips that can better compete for uber-lucrative data center customers and expanding into software and robotics.
The changes are much needed
Intel has struggled in the last few years, falling behind as the AI boom takes off. The company even reported its first annual loss in nearly 40 years last year.
Tan’s plan presents a compelling vision, though many of its fruits could take several years to pay off, such as AI chips that can compete with rivals’. Still, I think Intel could be a contender in a few years’ time, and given how much its stock has been beaten down in recent years, it is well valued.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
