Why Wall Street loves Intel’s new CEO
It’s pretty simple, actually.
Intel continues to surge as investors bet heavily on new CEO Lip-Bu Tan’s ability to turn around the once iconic American semiconductor giant. The stock is one of the top contributors to the S&P 500’s modest gains on Monday, even as Nvidia and Broadcom are major weights on the blue chips.
The excitement over Intel stems from Tan’s track record. He delivered a remarkable turnaround in sales and profits at Cadence Design Systems, the chip design software maker he was tapped to lead in the midst of a market meltdown in early 2009.
While he was at the helm, the company revamped its corporate strategy, expanding beyond the core group of traditional chip manufacturers who bought their semiconductor design software products. It revitalized sales by designing chip-based systems for clients in aerospace, automotive, and defense industries.
The company also made acquisitions, with an eye toward building up an intellectual property business in which corporations — instead of using Cadence software to design their own chip technologies — license chip technologies owned by Cadence and pay royalties. This has been a growing, high-margin business for Cadence.
In short, the strategy shift seemed to work even before the AI boom hit over the last few years, which has supercharged the company’s core business, sending sales and profits to record highs.
And Cadence’s share price, which is what Wall Street really cares about, followed suit.
Can Tan pull off a similar feat at Intel? It differs from a software company like Cadence significantly, not least because of Intel’s sprawling and struggling chip manufacturing business. But the market seems to have a lot of faith in Tan’s track record. The stock is up nearly 24% since he was tapped as its next CEO.
