Intel’s stock jumped 7% in after-hours trading after the struggling chip giant reported better-than-expected profits, a sign that its new CEO’s drastic cost-cutting measures are starting to work. The good news comes as a wave of high-profile investments, including one from the U.S. government, has given the company a much-needed lifeline.
This was the company’s first earnings report since it secured a series of massive investments from Nvidia, SoftBank, and the U.S. government. For years, Intel has been losing ground to its rivals, but these new deals have sent its stock soaring nearly 90% this year.
“Shares popped after-hours based on better-than-feared guidance,” said one analyst, pointing to “visible cost and gross margin progress” and a fresh round of funding that has shored up the company’s finances.
The new investments and cost-cutting represent a major shift in strategy from the company’s previous CEO, whose ambitious, expensive plans led to the company’s first annual loss in decades. The new CEO, Lip-Bu Tan, has moved quickly to right the ship.
While the financial news was good, the company did admit it’s still struggling with its new “18A” manufacturing process. The company’s finance chief, Dave Zinsner, said the number of good chips it can produce is still “not where we need them to be” and likely won’t be until 2027. Still, the stronger-than-expected profit and the massive influx of cash have given investors a new reason to believe in the future of the iconic American company.
