What Pat Gelsinger's Retirement Likely Means for Intel Stock

Core Viewpoint - Intel is entering a new phase following the unexpected retirement of CEO Pat Gelsinger, leaving uncertainty regarding the company's future direction and its impact on shareholders [1][2]. Leadership Changes - Gelsinger's retirement has led to David Zinsner and Michelle Johnston Holthaus serving as interim co-CEOs while the company searches for a permanent replacement [2][6]. - The board had hoped Gelsinger's return would restore Intel's former glory, but his departure raises questions about the company's leadership and strategic direction [2][3]. Gelsinger's Legacy - Gelsinger's tenure is viewed as mixed; he aimed to restore Intel's industry leadership but faced challenges from competitors like AMD and Nvidia, as well as TSMC's superior manufacturing capabilities [3][4]. - He set ambitious goals for Intel to catch up to rivals by 2024 and surpass them by 2025, alongside significant investments in foundry capabilities [4]. Financial Performance - Intel's product revenue for the first nine months of 2024 reached nearly $36 billion, but the company has struggled with financial losses, including a $19 billion net loss during the same period [7][10]. - The revenue of $39 billion in the first three quarters of 2024 showed little growth compared to the previous year, while costs rose significantly, contributing to financial strain [9][10]. Foundry Business - Intel Foundry has been established as a separate subsidiary, generating $13 billion in revenue in the first three quarters of 2024, but still lagging behind product revenue [8]. - There is political pressure for Intel to catch up with TSMC, which may lead to a potential spin-off of the foundry business [8]. Stock Valuation - Intel's stock has suffered due to its financial performance, but its price-to-sales (P/S) ratio of 1.8 is near multiyear lows, and its price-to-book value ratio is approximately 1.0, indicating a low valuation [11]. - This low valuation may present a speculative opportunity for investors, although the company's future direction remains uncertain [11][12]. Investment Outlook - Investors are advised to treat Intel's stock as a speculative hold until more clarity on the company's future direction is provided [12]. - The potential for significant returns exists if Intel can regain competitiveness and successfully spin off its foundry business, but current prospects appear speculative [13].