Image Source: Pexels

• Intel's stock fell 26% after its latest earnings report, marking a 50-year low.
• CEO Pat Gelsinger remains optimistic about new AI product Lunar Lake.
• The company announced 15,000 layoffs amid broader strategic changes.

Intel (INTC) CEO Pat Gelsinger acknowledged the company’s recent struggles in a fireside chat at Deutsche Bank’s technology conference in Dana Point, California.

The chipmaker, which saw its stock price plummet by 26% following its latest earnings report, is working to address the significant investor concerns that have emerged.

Stock falls 26% after dismal earnings report
 

Intel’s recent quarterly earnings report triggered its most severe stock decline in over 50 years. The company’s share price dropped by 26% on the day of the report, reflecting investor frustration over the firm’s performance.

The stock is down 59% this year, trading near its lowest levels in more than a decade.

The sharp decline highlights the intense pressure Intel faces as it grapples with challenges in both its core PC and data centre businesses.

Challenges in PC and AI sectors
 

Gelsinger noted that Intel continues to struggle with weakness in its AI-driven server business, a key area of focus for the company. Despite these issues, he expressed optimism about future prospects.

“We see the finish line in sight,” Gelsinger remarked, underscoring his belief in the company’s potential to overcome current difficulties.

In an effort to rejuvenate its market position, Intel plans to launch Lunar Lake, which Gelsinger described as “the most compelling AI PC product ever.”

This upcoming product is expected to play a significant role in the company’s strategy to regain traction in the competitive tech market.

On the day of the announcement, Intel’s shares rose by more than 4%, reflecting a broader rally in the tech sector.

Intel grapples with organisational changes
 

Intel has been under considerable strain as it invests billions into expanding its chip fabrication capabilities.

This investment comes at a time when the company is losing market share in its traditional PC and data centre businesses and struggling to make significant advancements in artificial intelligence.

Amid these challenges, Intel has announced a major restructuring plan, including the layoff of 15,000 employees. The company is also exploring potential cuts in its portfolio to streamline operations and address financial pressures.

Gelsinger believes that these strategic moves will ultimately benefit the company and is optimistic about the “signals” from external foundry customers.

Activist investor scrutiny
 

In response to growing scrutiny from activist investors, Intel has engaged advisors such as Morgan Stanley to help navigate the situation.

The company’s efforts to address investor concerns come against the backdrop of a recent board shake-up.

Industry veteran Lip-Bu Tan’s sudden departure from Intel’s board was reportedly due to sharp disagreements with other directors on the company’s strategic direction.

Financial performance and outlook
 

Intel’s financial performance has been under intense scrutiny following its latest earnings report, which revealed a net loss of $1.61 billion compared to a net income of $1.48 billion in the same quarter last year.

Revenue also fell short of estimates, contributing to investor concerns about the company’s ability to turn its fortunes around.

Despite the current difficulties, Gelsinger remains hopeful about Intel’s future prospects and the potential impact of new product innovations.

The company’s efforts to address its strategic and financial challenges will be crucial in determining its ability to regain investor confidence and improve its market position.

More By This Author: