What Happened?
Shares of computer processor maker Intel (NASDAQ:INTC) jumped 8.5% in the afternoon session after a Reuters report revealed that the new CEO Lip-Bu Tan planned to introduce a series of measures to drive value. Some of the measures include "a cutback on middle management, improvement in the company's chip-manufacturing performance, and the introduction of new semiconductors to power artificial intelligence servers." The stock's reaction suggested that the market interpreted this as positive news in line with the expectations for the positive change investors had anticipated.
The shares closed the day at $25.70, up 6.9% from previous close.
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What The Market Is Telling Us
Intel’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 16.6% on the news that the company named Lip-Bu Tan, the former chief executive of Cadence Design Systems, as its new CEO.
Following the announcement, Bank of America analysts decided it was time to change their tune, upgrading Intel from Sell to Hold. Their improved outlook is related to Tan's solid track record, as they believed with him at the helm, there was a better shot at turning things around. They also raised their price target to $25.
Intel is up 27% since the beginning of the year, but at $25.66 per share, it is still trading 42.4% below its 52-week high of $44.52 from March 2024. Investors who bought $1,000 worth of Intel’s shares 5 years ago would now be looking at an investment worth $512.57.
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