MW Analysts love Intel's CEO choice - but not enough to recommend buying the stock

By Emily Bary

Lip-Bu Tan is seen as a 'transformative' leader who will move to cut costs. But both halves of Intel's business both require major fixes.

With Lip-Bu Tan set to take over as Intel Corp.'s chief executive in a matter of days, investors now have a new "reason to hope," according to Bernstein analyst Stacy Rasgon.

Lately, the big source of positive momentum for Intel shares had been the prospect of a deal that would break the company up or give it significant outside assistance. But it's unclear whether Tan will move to split up Intel, and Wall Street seems to like his appointment anyway, with Intel shares up 11% in premarket action Thursday.

Read: Intel's stock soars as Lip-Bu Tan is named CEO. But he faces a tough task ahead.

The big picture is that Tan will emerge as an "active force for change" at Intel, in Rasgon's view. He "did not have to take this job," Rasgon noted, given that he is 65, highly wealthy "and has a lot going on."

Plus, Tan actually left Intel's board last summer, a move that "demonstrated that he will not stand passively by as things fall apart," Rasgon wrote. If he's coming back now, Tan "must have carte blanche to do whatever it is that he feels needs to be done." And he's likely entering the role with a more rational view of Intel's situation, in contrast to former CEO Pat Gelsinger, who Rasgon thinks was undone by "unbridled optimism."

But Rasgon is still among the many analysts covering Intel who declined to recommend Intel's stock for now, reminding investors that Tan has "a lot of wood to chop." He maintained a market-perform rating on Intel's stock.

Cantor Fitzgerald's C.J. Muse also was on the sidelines, rating Intel's stock at neutral. He wasn't sure whether Tan's appointment makes a business split any more imminent, but he felt more confident that other strategic moves would take place.

"Much more significant cost-cutting likely on the come," Muse wrote. "What is also clear? The next step is for Intel to secure more capacity" from Taiwan Semiconductor Manufacturing Co. for next year and beyond.

Mizuho's Vijay Rakesh took a similar view, writing that Tan's return "could help drive a renewed focus on a lean, mean [Intel], focused on technology and driving a competitive product roadmap."

But he maintains a neutral stance as well on Intel's stock given the challenges ahead. "We believe foundry remains an overhang, while it needs to stop bleeding market share in products and regain leadership in PC/servers/AI," he wrote.

Stifel's Ruben Roy was impressed by the "transformative impact" that Tan had at Cadence Design Systems Inc. $(CDNS)$, where he served as CEO for more than a decade.

While Tan's leadership at Intel could be helpful over the long run, Roy said he still expects "a lengthy period of transition as the company realigns with the evolving AI-centric opportunity set that has been accelerated in recent years." Intel hasn't been competitive in AI so far.

Roy is sticking with his hold rating on the stock.

Of the 45 analysts tracked by FactSet who cover Intel's stock, 38 have neutral-equivalent views. Three have buy ratings and four rate the stock at sell.

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-Emily Bary

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March 13, 2025 08:29 ET (12:29 GMT)

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