Intel CEO Lip-Bu Tan’s Struggles to Impress JPMorgan Amid Turnaround Efforts

This article does not constitute investment advice. The author does not hold any positions in the stocks discussed.

Intel faced a challenging market response after disclosing disappointing earnings, resulting in a 9.4% decline in its share price today. Despite beating Wall Street’s revenue expectations—reporting $12.9 billion against a consensus of $11.9 billion—the tech giant fell short in earnings per share (EPS) estimates, posting a loss of $0.01 instead of the predicted gains. Moreover, the company announced significant layoffs affecting 30% of its workforce as part of a broader strategy to cut costs and streamline operations.

JPMorgan’s Skepticism Regarding Intel’s Recovery

Before Intel’s earnings announcement, there was a heightened interest on Wall Street regarding the firm’s advancements in next-generation chip manufacturing, particularly the much-anticipated 18A process and the status of the older 14A technology. However, the results failed to impress, as CEO Lip-Bu Tan revealed plans to limit the applications of the 18A technology for internal purposes only, raising doubts about whether the 14A development would proceed if Intel secures sufficient contract orders.

This situation casts uncertainty over Intel’s Foundry business model, leading analysts to question the profitability of the proposed 18A process as a viable contributor to order flow. While CFO David Zinsner attempted to reassure investors by stating that production of the 18A technology would occur in “waves”and is expected to endure long-term, concerns linger about the sustainability of Intel’s foundry operations.

Intel’s logo accompanied by a chip graphic.

Following the earnings release, JPMorgan provided its analysis, indicating a continued downward trend for Intel, with shares sitting around $20.5—down 9% as of late afternoon. While JPMorgan slightly adjusted its price target for Intel shares from $20 to $21, it maintained an Underweight rating, reflecting ongoing concerns about the firm’s future performance.

A critical observation from the earnings call was that Intel’s revenue may have benefited from order front-running in response to tariff impacts. JPMorgan cautioned that this urgency in order placement could lead to weaker demand down the line, particularly in the latter half of the year, as customers may have preemptively stocked up on chips, reducing future orders.

Additionally, speculation about a shift to a fabless model—a strategy suggesting Intel may exit direct chip manufacturing—has raised red flags for investors. JPMorgan’s commentary highlighted the perception that Intel is grappling with a lack of clarity on its road to recovery, prompting fears of potential losses amounting to hundreds of billions in developmental expenditures.

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