By Arsheeya Bajwa and Deborah Mary Sophia
(Reuters) – Intel CEO Pat Gelsinger's removal has abruptly ended his role in the struggling chipmaker's turnaround efforts, leaving Wall Street with doubts about his ambitious revival plan.
A change at the top after a tumultuous year was cheered by investors as Intel (NASDAQ:INTC) shares rose as much as 6% following the news, before closing down 0.5% on Monday.
The shares have slumped over 50% this year as the company loses out on an AI-fueled rally compared to chipmaking peers. Nvidia (NASDAQ:NVDA) has become the second most-valuable company of 2024, while Intel's market capitalization has dropped below $100 billion for the first time in 30 years.
Intel struggled under Gelsinger, as his plan to increase focus on its money-losing contract manufacturing business hurt cash flow. Despite a spending spree, Intel failed to keep up in the AI race and lagged behind Taiwan's TSMC in chip manufacturing.
The company also missed an investment in AI leader OpenAI, while Gelsinger's comments on Taiwan cost Intel its discounted chipmaking deal with TSMC.
Intel's revenue fell to $54 billion in 2023, down nearly one-third from when Gelsinger took the helm. Wall Street's earnings expectations have sharply declined, raising the stock's forward price-to-earnings ratio – a benchmark for valuing stocks.
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