Shares of Intel are skyrocketing on Thursday, primarily because the company announced that Lip-Bu Tan, former CEO of Cadence Design Systems, will be its new chief executive, effective March 18.
At the time of writing, INTC stock was up over 14%, trading around $23.
Despite the surge, the stock remains down approximately 45% over the past year.
Tan, a well-regarded industry veteran, is stepping into the leadership role at a critical time, as Intel faces intensifying competition in the chip design market and mounting concerns over its semiconductor foundry business.
Intel has been losing market share in both its core PC and server markets, and investors are eager to see how Tan plans to address these challenges.
One of the key decisions ahead for him will be the future of Intel’s foundry business, which has been incurring significant losses.
Street on Intel’s leadership change
Analysts have weighed in on the leadership shift, with mixed views on its potential impact.
Bernstein analysts maintained a market perform rating on Intel with a price target of $25.00.
They acknowledged the positive market reaction to Tan’s appointment and expressed confidence in his leadership, given his extensive experience in both public and private technology companies.
His background in electronic design automation (EDA), foundry services, and intellectual property (IP) positions him well to understand Intel’s ecosystem.
Stifel analysts reiterated a hold rating with a $21.00 price target, highlighting Tan’s successful tenure at Cadence Design Systems, where he had a transformative impact over 11 years.
While they acknowledged his strong credentials, they cautioned that Intel is undergoing a significant transition, which is likely to take a prolonged period.
The firm pointed out that Intel must adapt to the rapidly evolving AI landscape, an area where competitors have taken the lead.
Cantor Fitzgerald analysts maintained a neutral rating with a $29.00 price target, noting that Tan’s leadership will be tested as he works to advance Intel’s 18A and leading-edge manufacturing capabilities.
The firm also pointed to Tan’s previous resignation from Intel’s board in August 2024 after serving for 23 months, reportedly due to frustrations with the former CEO and board’s lack of aggressiveness in cost-cutting.
Given his return as CEO with the same board still in place, Cantor Fitzgerald suggested that changes in board leadership could be necessary for Intel to implement a more decisive strategy.
Bank of America upgraded Intel to neutral from underperform following the appointment, citing his strong track record and potential to lead a turnaround.
The firm raised its price target to $25 from $19, highlighting Tan’s leadership at Cadence Design Systems, where the stock saw a 32x appreciation compared to the SOX index’s 16x gain.
BofA also pointed to Tan’s familiarity with Intel, given his previous board membership, and his extensive industry connections as Chairman of Walden International.
While BofA analysts see an increased opportunity for restructuring under his leadership, they cautioned that Intel still faces significant challenges.
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