Intel Q1 Earnings Beat, Q2 Guidance Misses: This "Lesson" Deserves More Attention!

TradingKey - Former semiconductor giant Intel (INTC.US) reported stronger-than-expected earnings for the first quarter of 2025. However, weaker guidance for the second quarter sent its shares down 5%  in after-hours trading. While concerns over the pace of business recovery and the impact of U.S. tariffs,  a more critical development may be Intel’s plan to design its own chips.

On Thursday, April 24, Intel posted Q1 2025 revenue of $12.67 billion, surpassing expectations of $12.3 billion. Earnings per share (EPS) came in at 13 cents, significantly above the projected 1 cent.

The revenue growth in Q1 was largely attributed to a surge in customers' purchases ahead of new U.S. tariffs. Citing continued macroeconomic uncertainty,  Intel issued Q2 revenue between $11.2 billion and $12.4 billion, well below the market expectations of $12.9 billion.

This was the company’s first earnings report under new CEO Lip-Bu Tan, who succeeded Pat Gelsinger. A well-respected figure in the semiconductor industry, Tan is seen by investors as key to reinvigorating Intel’s competitiveness.

As part of its cost-cutting strategy, Intel announced it will reduce both operating and capital expenditures, lowering its  2025  capital spending forecast from $20 billion to $18 billion. Reports indicate that the company plans to lay off around 20% of its workforce.

For the first time, Lip-Bu Tan outlined a broad plan to rebuild Intel's innovation culture. Measures include requiring employees to work in the office four days a week, reducing meetings, and eliminating unnecessary administrative tasks.

During the earnings call, Tan emphasized that he would carefully evaluate Intel's existing product lineup to align it with emerging AI trends, such as robotics and AI agents.

Reuters noted that one of Intel's biggest missteps over the past decade was failing to challenge Nvidia's dominance in the AI market, a situation Tan now aims to change.

The CEO stated that Intel would emulate Nvidia's approach—selling not just chips but entire data center solutions.

Tan cautioned that this effort would be highly challenging and would not yield immediate results.

According to analysts at Technalysis Research, if Intel can successfully develop the necessary software support for its new AI chips, it could unlock a significant growth opportunity.