Intel's 2025 Outlook: Is a Recovery on the Horizon?

August 22, 2024 09:44 AM PDT | By Team Kalkine Media

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Intel (NASDAQ:INTC)has faced a challenging year, with a 57% decline in its YTD performance, making it one of the weakest S&P 500 Index stocks of 2024. This downturn is significant compared to its performance over recent years, with persistent losses over 3, 5, and 10-year periods, although it shows modest gains over the past two decades.

Once a leading force in the dot-com era, Intel reached an all-time high of $75.81 per share on August 23, 2000, but now trades at a fraction of that value. The company's recent Q2 earnings were disappointing, with the stock dropping nearly 30% due to unmet revenue and profit expectations. Although Intel has made some recovery from its 2024 lows, regaining investor confidence remains a challenge.

Looking ahead to 2025, Intel is implementing significant changes to improve its financial health. The company plans to reduce its capital expenditures (capex) by 20% for 2024, setting a new range between $25 billion and $27 billion. For 2025, Intel aims to further lower capex to between $20 billion and $23 billion.

Additionally, Intel is cutting operating expenses, targeting $17.5 billion in 2025, which is 20% less than previously forecasted. The company is also reducing its workforce by 15% by the end of 2025. These measures are expected to generate $10 billion in direct savings across various areas.

Intel’s CEO, Pat Gelsinger, stated that these strategies are designed to ensure a sustainable model with the financial resources and liquidity necessary for long-term goals. The company has also paused its dividend to preserve cash, following similar moves by other firms like B. Riley (RILY) and Burberry (BURBY) in recent months.

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