Intel’s (NASDAQ: INTC) stock price is experiencing a strong rally as investors respond positively to the announcement of a leadership change at the once-dominant semiconductor giant.
As of press time, Intel’s shares were trading at $24.86, more than 3% from the previous market close. This marks a continuation of gains from the pre-market session, during which the stock surged over 5% at its peak.
Despite the short-term optimism, Intel’s long-term performance tells a different story. The stock remains under significant pressure, having suffered a nearly 50% decline year-to-date.
Why INTC is rallying
Investors seem to be reacting positively to the news that Intel’s Chief Executive Officer, Pat Gelsinger, is retiring. The leadership change will also see Gelsinger step down from the firm’s board of directors when Intel is in the middle of executing a turnaround plan.
His tenure has largely been marked by obstacles, as reflected in the company’s stock performance. In this case, the share price was down almost 60% during Gelsinger’s term as CEO.
Under Gelsinger’s watch, Intel has also lost market share while struggling to compete with rivals.
Although the company has implemented ambitious initiatives, including expanding manufacturing and entering the semiconductor foundry market with CHIPS Act support, it has lagged in adopting advanced technologies and missed key opportunities in artificial intelligence (AI).
Following the December 1 exit, Intel appointed David Zinsner, CFO, and Michelle Johnston Holthaus, now Intel Products CEO, interim co-CEOs while the company searches for a permanent leader.
Intel still in a tough spot
Away from the optimism surrounding the leadership change, Intel is still in a tough spot. The company needs to recapture its market position, especially within the AI space.
At the same time, Intel should strive to reduce its reliance on Taiwan Semiconductor Manufacturing Company (NYSE: TSM) for production, as its domestic fab efforts are unlikely to generate significant revenue before 2027.
Indeed, if Intel gets its act together, the technology entity could benefit from the projected continued growth of semiconductors globally. To this end, Citi analysts have expressed optimism about the U.S. semiconductor sector, predicting an end to the recent downturn.
Despite an 11% drop in consensus estimates during earnings season, the firm expects global semiconductor sales to rise 9% year-over-year in 2025, following a 17% growth in 2024.
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