Intel (NASDAQ:INTC) shares were on a roller-coaster ride this week following the announcement that CEO Pat Gelsinger retired from his position at the struggling chip giant on December 1st.
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The reason for Gelsinger stepping down, though, had little to do with him wanting to retreat into a cozier lifestyle, but rather because he was forced out by the board, who appear to have lost confidence in Gelsinger’s strategy for turning the company’s fortunes around.
According to a Bloomberg report, tensions escalated last week after Gelsinger met with the board to talk of ways to regain market share and close the gap with AI leader Nvidia. Following the meeting, he was reportedly given the choice to retire or face removal.
In the meantime, the company has appointed CFO Dave Zinsner and Intel Products CEO Michelle Johnston Holthaus as interim co-CEOs, while the Board of Directors conducts a search for a new CEO.
For Rosenblatt’s Hans Mosesmann, this development serves as yet another example of the malaise afflicting the fallen semi colossus.
“Pat Gelsinger’s sudden departure as CEO from Intel (after BoD support of a continuation of existing strategy) is indicative, in our view, of faster deterioration of fundamentals, product roadmaps, share losses, and no discernable AI play,” said Mosesmann, who ranks in 5th spot amongst the thousands of Wall Street stock experts.
With no internal successors lined up, bringing in an external CEO to lead the company is a “multi-year gig that is a tall order,” especially given the increasingly demanding innovation cycles. Furthermore, there is now clear evidence that the CHIPS Act has had little to no impact on improving Intel’s current trajectory.
“At the end of the day,” Mosesmann summed up, “you need leading edge products, innovation, and execution; none of which we saw during Pat Gelsinger’s reign.”
Unsurprisingly, Mosesmann gives Intel shares a Sell rating, although he raised his price target from $17 to $20. Nevertheless, there’s still a potential downside of 11% from current levels. (To watch Mosesmann’s track record, click here)
Broadly speaking, Wall Street’s feelings about Intel are lukewarm at best. Joining Mosesmann, 6 analysts also recommend a Sell, while 22 prefer to sit on the fence with a Hold. Only one analyst dares to go against the grain with a Buy rating. The consensus? A Hold (i.e. Neutral). The average price target of $24.40 implies an 8.5% upside for the next 12 months. (See INTC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
