Is Intel's Strategic Restructuring a Buy-Point for Value Investors?

When it comes to value investing, the key is to spot companies that are willing to reinvent themselves in the face of adversity. Intel (INTC) is one such story. Under the leadership of CEO Lip-Bu Tan, the chipmaker has embarked on a bold restructuring plan that cuts costs, streamlines operations, and reorients its business around the explosive demand for AI. But the question on every investor's mind is: Is this a long-term value creation play worth betting on, or just a desperate attempt to stay relevant in a rapidly evolving tech landscape? Let's break it down.

The Cost-Cutting Play: A Foundation for Growth

Intel's restructuring is no small feat. The company has slashed its core workforce by 15% and plans to cut it by 20% by year-end, with the majority of job losses already executed. Middle management layers have been reduced by 50%, a move that signals a shift toward a flatter, more agile organization. These cuts are not just about trimming fat—they're about reallocating capital to high-priority areas like the Intel 18A process node, which is expected to ramp in H2 2025.

The financial impact? Non-GAAP operating expenses are projected to drop to $17 billion in 2025 and $16 billion in 2026, with a 6% annual reduction target thereafter. This cost discipline is critical. By 2026, analysts project Intel's operating expenses could fall to levels that free up billions in capital for R&D and AI investments. The question is whether these savings can offset the $1.9 billion in restructuring charges and the $800 million in impairment costs already booked in Q2 2025.

Operational Streamlining: Focus on What Matters

Intel's decision to spin off its Network and Edge Group (NEX) into a standalone entity is a masterstroke. By separating this unit, Intel is unlocking value in the AI and networking infrastructure sectors while allowing NEX to operate independently. This mirrors the 2024 spin-off of the Altera unit, where Intel retained an anchor stake and sought strategic partners to fuel growth.

The operational shift extends to manufacturing. Intel is now building facilities based on actual demand rather than speculative growth, a stark departure from past practices. This approach is expected to reduce overhead and improve margins, particularly as the company consolidates packaging operations in Costa Rica and slows construction in Ohio, Poland, and Germany. For value investors, this means a more disciplined balance sheet and a focus on capital efficiency—two pillars of long-term value creation.

AI-Driven Growth: The New Gold Rush

The real test of Intel's restructuring lies in its ability to capitalize on the AI boom. The company has already launched the Intel® Xeon® 6 series of CPUs, which deliver a 1.9x boost in AI performance in MLPerf benchmarks. These chips are tailored for data center and edge computing applications, positioning Intel to compete in high-margin AI markets.

But the stakes are high. NVIDIA dominates 80% of the AI accelerator market, and AMD's MI300X is gaining traction with its 192GB HBM3 memory. Intel's Gaudi AI chips, priced 50% cheaper than NVIDIA's H100, are targeting cost-conscious enterprises, but affordability alone won't win the race if performance lags. The 18A process node is Intel's ace in the hole, as it could enable the company to produce next-gen chips that rival competitors in both efficiency and performance.

The Long-Term Outlook: A Cautious Bull Case

Analysts are split. JPMorgan's Harlan Sur has a “underweight” rating on INTC with a $21 price target, citing uncertainty around the foundry business and execution risks. However, the company's long-term financial projections tell a different story. By 2030, Intel's revenue is expected to surpass $80 billion, driven by AI, 5G, and IoT. EBITDA margins are projected to stabilize, and the P/E ratio could climb to 22, reflecting improved investor confidence.

The key risks? Manufacturing delays, competitive pressures from AMD and NVIDIA, and the success of the fabless foundry pivot. If Intel can execute on its 18A roadmap and scale production of AI chips, it could carve out a niche in the market. But if it falters, the stock may remain volatile, as evidenced by the 8.5% drop post-Q2 earnings.

Is It a Buy for Value Investors?

For the patient investor, Intel's restructuring offers a compelling case. The company is shedding non-core assets, cutting costs, and doubling down on AI—a sector with decades of growth potential. The $20 billion investment in U.S. manufacturing is a strategic move to secure supply chains and reduce reliance on overseas production.

However, the short-term pain is real. The GAAP loss of $0.67 per share in Q2 2025 and the “underweight” rating from JPMorgan highlight the risks. Value investors must weigh the potential rewards of a successful AI pivot against the likelihood of continued volatility.

My take? If you're bullish on AI and willing to ride through the near-term turbulence, Intel could be a buy at these levels. But only if you're prepared to hold for the long haul—five years, at minimum. The stock isn't a screaming buy today, but it's a watch-and-wait opportunity for those who believe in the power of AI to transform the semiconductor industry.

In the end, Intel's restructuring is a high-stakes gamble. If the company can reinvent itself as an AI-first business, it could unlock significant value for shareholders. But for now, it's a bet that requires patience, a stomach for volatility, and a belief that the next generation of chips will deliver on their promise.