What Happened?

Shares of computer processor maker Intel (NASDAQ: INTC) jumped 7.4% in the afternoon session after investor optimism picked up regarding its aggressive corporate restructuring plans and a price target hike from a Wall Street bank. 

The semiconductor giant is moving forward with a significant transformation aimed at creating a "leaner, faster, and more efficient company." This strategy includes substantial cost-cutting measures, such as layoffs at its operations in Oregon and Israel, as part of a plan to reduce its global workforce. Adding to the positive sentiment, analysts at Citigroup raised their price target on Intel's stock to $24 from $21. While maintaining a "Neutral" rating, the move signals growing confidence in the company's turnaround strategy under its new leadership. Investors appear to be betting that these decisive, albeit difficult, actions will improve efficiency and strengthen Intel's competitive position in the semiconductor market.

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What Is The Market Telling Us

Intel’s shares are extremely volatile and have had 35 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 6 days ago when the stock dropped 5.1% after reports emerged that the company is considering a significant shift away from its 18A chip-making process. The potential move away from marketing its 18A process to new foundry customers signals a major pivot for the chipmaker. This technology, which has incurred billions in development costs, was intended to make Intel competitive with industry leader TSMC. A shift to the next-generation 14A process could result in a significant write-off, potentially costing hundreds of millions or even billions of dollars. This news creates uncertainty around Intel's ambitious plan to become a major contract chip manufacturer for other companies.

Intel is up 16.8% since the beginning of the year, but at $23.63 per share, it is still trading 32.2% below its 52-week high of $34.87 from July 2024. Investors who bought $1,000 worth of Intel’s shares 5 years ago would now be looking at an investment worth $403.09.

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