Intel Corp. INTC CEO Pat Gelsinger acknowledged investor concerns following a significant drop in the company’s stock price.
What Happened: Gelsinger said the company is working diligently to address these concerns. He made these remarks during a fireside chat at Deutsche Bank’s technology conference in Dana Point, California, CNBC reported on Thursday.
"We respect some of the skepticism we've received from the market," Gelsinger said. "We believe we're up for the challenge."
Intel’s stock plummeted 26% after a disappointing quarterly earnings report earlier this month, marking its worst day on Wall Street in over 50 years. The stock is down over 57% this year, trading near its lowest in more than a decade.
Gelsinger noted that Intel is facing challenges in its server business due to artificial intelligence-driven weaknesses but remains optimistic about the future. He highlighted the upcoming launch of Lunar Lake, which he described as “the most compelling AI PC product ever.”
Intel has engaged advisors, including Morgan Stanley, to fend off activist investor scrutiny. Gelsinger did not address the recent departure of board member Lip-Bu Tan, according to the report.
See Also: NVIDIA To Rally Over 31%? Here Are 10 Top Analyst Forecasts For Thursday
Earlier this month, Intel announced layoffs of 15,000 employees and potential portfolio cuts. Gelsinger believes these efforts will yield positive results, citing “signals” from external foundry customers.
In the latest quarter, Intel reported a net loss of $1.61 billion, compared to a net income of $1.48 billion in the same period last year, with revenue missing estimates.
Why It Matters: Intel’s recent struggles are part of a broader context in the semiconductor industry. The departure of board member Tan was a significant event, as he left after disagreements with CEO Gelsinger and other directors over the company’s direction.
Tan, a semiconductor industry veteran, had joined Intel to help restore its status as a leading global chipmaker.
Moreover, Intel’s job cuts come at a time when the company is competing for a $20 billion U.S. chip subsidy aimed at creating thousands of manufacturing and construction jobs. This has drawn scrutiny from lawmakers, especially since the U.S. strategy aims to reduce dependence on Asian semiconductor technology.
Additionally, Intel’s challenges are set against the backdrop of strong performance by competitors like NVIDIA Corp. NVDA. Nvidia recently reported better-than-expected second-quarter earnings, which has further highlighted the competitive pressures Intel faces.
Nvidia’s stock surge has also turned many of its employees into millionaires, reducing employee churn to record lows. The chip designer is known for its demanding work environment, where employees slog up to seven days a week, with work hours stretching until 2 a.m.
Price Action: Intel’s stock closed at $20.13 on Thursday, up 2.65% for the day. After hours, it edged up by 0.50%. Despite this, the stock has declined by 57.89% year to date. In contrast, Nvidia has seen a substantial rise this year, with a year-to-date gain of 144.11%, and is currently trading at $117.59, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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