Intel (NASDAQ:INTC) stock took a significant hit following its latest earnings report and left investors wondering whether this dip is a buying opportunity or a warning sign. The chipmaker is struggling to make a turnaround due to the accelerating competition in AI and data centers.
Will patient investors be rewarded, or is your money better invested elsewhere? Let’s take a look.
Intel reported Q1 2025 revenue of $12.7 billion, which was flat year-over-year but slightly above analyst expectations. However, the company posted a substantial net loss of $800 million. This translated to a loss of $0.19 per share on a GAAP basis.
Non-GAAP earnings came in at $0.13 per share and exceeded modest expectations, though investors were far more concerned with the company's forward guidance.
For Q2 2025, Intel forecasts revenue between $11.2 billion and $12.4 billion. This is significantly short of the $12.82 billion consensus estimate. More concerning is the projection of breakeven results on an adjusted per-share basis, which is below the $0.07 profit analysts had anticipated.
CFO David Zinsner attributed this cautious outlook to "elevated uncertainty across the industry" and noted that Q1 sales likely benefited from customers stockpiling chips in anticipation of potential tariffs.
The new management team under CEO Lip-Bu Tan is moving aggressively to cut costs and has reduced the 2025 operating expense target to $17 billion (down from $17.5 billion) and setting a 2026 target of $16 billion. Capital expenditures have also been trimmed to $18 billion for 2025. This is down from the previous $20 billion target.
Cost-cutting is necessary, but Intel remains in defensive mode rather than positioning itself for growth. You’re not going to see double-digit growth anytime soon when a company is slashing its workforce by a fifth.
Buying the dip on INTC makes no sense to me in the current environment. Why gamble on Intel's multi-year turnaround when the semiconductor industry is flush with companies already capitalizing on the AI revolution?
NVIDIA (NASDAQ:NVDA), AMD (NASDAQ:AMD), or Broadcom (NASDAQ:AVGO) are much better “turnaround” bets at their current dips.
