Wall Street is optimistic about Chen Liwu steering Intel, but remains cautious

According to Zhitong Finance APP, Intel (INTC.US) has appointed Chen Liwu as the new CEO, a decision that has garnered widespread attention on Wall Street and injected a dose of optimism into the future of this chip manufacturer. Chen Liwu's extensive experience and outstanding achievements in the semiconductor industry have led the market to have high expectations for his leadership capabilities. However, Intel still faces severe challenges, and the market remains cautious about its future performance. After the announcement of Chen Liwu's appointment as the new CEO, Intel's stock price rose by more than 16% in early trading, while other semiconductor companies, including competitors AMD (AMD.US) and NVIDIA (NVDA.US), faced sell-offs. In response, KeyBanc Capital Markets analyst John Vinh expressed encouragement regarding Chen Liwu's appointment, noting that during his 12 years at Cadence Design Systems (CDNS), he created significant shareholder value and has an in-depth understanding of Intel's business as a member of Intel's board of directors. Vinh stated, "Despite the many challenges Intel currently faces, we are encouraged by Chen Liwu's appointment. We look forward to hearing more about his strategies to turn Intel around." He maintained an "Equal Weight" rating on Intel and set a target price of $20. Morgan Stanley analyst Joseph Moore shared a similar view. He praised Chen Liwu for having "very strong" industry knowledge and a high reputation in the industry. Although Chen Liwu has limited experience with companies like Intel, Moore believes his appointment will bring new vitality and transformation to the company. The analyst maintained a "Hold" rating on Intel with a target price of $25. He wrote, "If the company continues to prioritize the development of world-class foundries, we especially hope to see the company gain more experience in this area. Our sense is that, given Chen Liwu's commitment to these two aspects in his comments, this reduces the likelihood of divesting foundries or products. However, there are still significant challenges, as delays in the server roadmap, a lack of recent AI products, a competitive client CPU market, and over $10 billion in losses in the foundry business over the past 12 months pose challenges for the company's near-term growth and profitability, with no quick solutions. However, decisive and swift action surrounding the CEO decision is a good start." After Chen Liwu's appointment, Bank of America analyst Vivek Arya upgraded Intel's rating to "Neutral," stating that Intel currently faces "a better opportunity to turn a profit." He believes that under Chen Liwu's leadership, Intel has a greater chance of restructuring and turning the situation around. Intel's strong influence and brand position in the enterprise PC/server CPU sector increase the likelihood of success. Arya wrote, "Improving market conditions may also pave the way for Intel to gradually divest its Altera and automotive assets, thereby reducing the leverage on its balance sheet. Intel's substantial transformation is still underway, but if executed properly, it could create headwinds for peers like AMD, as AMD's share in the PC/server CPU market has been steadily increasing so far."