Intel extends gains to 2.1% as management presents at conference

Intel extends gains to 2.1% as management presents at conference

Intel Corporation (INTC) reported a 2.1% increase in stock price following its first quarter 2025 earnings call. The company's new CEO, Lip-Bu Tan, and CFO, David Zinsner, presented the results and outlined a strategic plan to drive sustainable growth and regain market share. This positive reaction aligns with historical patterns where INTC has shown a 40.00% win rate in the three days post-earnings, though average returns have been modest at -0.71% over this short window. Over longer horizons, the stock has demonstrated a 66.67% win rate at 30 days with an average return of 3.31%, suggesting that patience may be rewarded despite initial volatility.



Tan, who joined Intel five weeks ago, emphasized the company's progress in the first quarter, driven by strong execution despite macroeconomic uncertainty. The company delivered revenue, gross margins, and EPS above guidance. Tan highlighted the need for cultural transformation and operational simplification to enhance innovation and agility. He announced a series of initiatives to streamline the company's structure, reduce organizational complexity, and empower smaller teams to move faster and make better decisions. These efforts could address historical challenges in execution, where the stock has occasionally faced drawdowns following earnings announcements.

The company expects operating expenses (OpEx) to be $17 billion in 2025 and $16 billion in 2026, with a focus on reducing costs and improving efficiency. Tan also directed teams to find an additional $2 billion in savings in gross capital expenditures (CapEx), setting the target for 2025 at $18 billion. He emphasized the importance of focusing on core businesses and redefining the product portfolio to optimize for new AI workloads. These cost discipline measures may help stabilize returns, particularly given the backtest’s indication that INTC’s best average returns (3.72%) occurred around day 50 post-earnings, suggesting longer-term strategic execution is critical.

Tan's long-term strategy includes refining the AI strategy, building trust with Foundry customers, and strengthening the balance sheet. He plans to monetize non-core assets and be prudent with capital investments. Tan also announced the decision not to spin off Intel Capital but to work with the team to monetize the existing portfolio while being more selective on new investments. These steps aim to address structural inefficiencies that may have contributed to the stock’s historically mixed performance post-earnings, where short-term volatility (3-day average -0.71%) contrasts with a higher 30-day hit rate.

Intel's stock price rose 2.1% following the earnings call, reflecting investor confidence in the company's strategic direction and operational improvements. The company's focus on cultural transformation, operational efficiency, and product innovation positions it well for future growth and market competitiveness. While historical backtests reveal modest average returns and volatility after earnings calls, the current leadership’s emphasis on execution and cost discipline could signal a turning point, aligning short-term momentum with longer-term value creation.

References:
[1] https://www.rev.com/transcripts/intel-q1-2025-earnings-call