Oct 24 (Market Insider) – Intel (INTC.O) shares surged nearly 9% in premarket trading Friday, as investors rallied behind a strong quarterly profit beat fueled by CEO Lip-Bu Tan’s aggressive cost-cutting and strategic restructuring.
The results mark a significant turning point for the U.S. chipmaker, which has struggled with manufacturing setbacks and fierce competition. After a bruising 2024 that saw Intel post its first annual loss in nearly four decades, the company is aggressively using operational discipline to rebuild investor confidence.
A New Strategy: Cost Cuts and External Cash
Intel’s turnaround efforts were bolstered during the quarter by multi-billion-dollar investments from AI-rival Nvidia (NVDA.O) and Japan’s SoftBank, as well as a new stake from the U.S. government. These investments have provided a critical financial cushion, allowing the company to stabilize operations as it pursues high-stakes bets on future growth.
Tan, who took the helm following criticism of his predecessor’s spending-heavy approach, has pivoted Intel’s capital strategy. He has pared back ambitious manufacturing plans, cut over 20% of the workforce, and sold a majority stake in the Altera division to rely more on external commitments.
Market Confidence and a Soaring Valuation
The new strategy has been a boon for the stock. Intel shares have rebounded more than 90% in 2025, impressively outperforming AI chip leaders Nvidia and AMD (AMD.O) for the year.
This optimism has pushed Intel’s valuation into overdrive. The stock now trades at a 12-month forward price-to-earnings (P/E) ratio of 71.51, a steep premium compared to Nvidia’s 30.49 and AMD’s 40.14.
“Intel has turned a corner and is steadying the ship,” said Ben Bajarin, CEO of Creative Strategies. “It feels like a strong setup for 2026.”
Demand Up, But Manufacturing Hurdles Remain
Operationally, Intel said demand for its chips is outpacing supply. This is particularly true in the data center segment, where operators are racing to upgrade central processing units (CPUs) to support demanding AI workloads.
However, the turnaround is far from complete. Finance chief Dave Zinsner delivered a dose of caution, warning investors that yields for its advanced 18A manufacturing process remain below industry standards. Zinsner stated that these yields are not expected to reach “acceptable levels” until 2027.
Analysts at Bernstein echoed the cautious tone, warning against premature celebration. “We understand the desire to claim victory for the embattled company, but this fight is far from over; perhaps it’s better to call it a draw for now.”
