Intel rises on revenue beat as CEO hunt dominates investor focus

(Reuters) - Intel shares rose 1.7% premarket on Friday as the chipmaker's quarterly revenue beat low expectations and investors focused on its search for a new CEO to steer the company through one of its most difficult periods.

Former CEO Pat Gelsinger was ousted last month, well before the completion of his four-year plan to turn around the company from years of missteps in its manufacturing operation and missed opportunities around the artificial intelligence boom that have left the erstwhile American chipmaking icon far behind its rivals.

Intel also forecast current-quarter revenue below estimates on Thursday.

"At this point bad results from Intel no longer burn the way they used to as investors are likely growing numb to the company's travails," Bernstein strategists said in a note.

"And frankly, beats or misses on their business fundamentals likely take a back seat for now to the impending CEO transition (if we get one) and what they and the board might choose or not choose to do with the company."

The company has named CFO David Zinsner and senior executive Michelle Johnston Holthaus as interim co-CEOs while the board conducts a search for a new leader.

Once the dominant force in the PC market, Intel has in recent years been losing share to rival Advanced Micro Devices. It also passed on an investment in ChatGPT-owner OpenAI, before the success of the chatbot revolutionized the tech industry.

Companies looking to capitalize on generative AI technology have prioritized spending on specialized AI processors that can churn huge amounts of data, crimping demand for the traditional server processors that Intel sells.

"Strategic alternatives will be the primary bull case for the foreseeable future, but we don’t see how this gets done with the Foundry business behind on technology and fully reliant on product business with no real foundry customers in sight," Jefferies analyst Blayne Curtis said.

Shares of peers Nvidia were down nearly 1% before the bell on Friday, while Advanced Micro Devices was up about 1%. In 2024, Intel fell 60%, while AI chip leader Nvidia rose 171%. Qualcomm gained 6% and AMD lost 18% in the same time period. Intel's 12-month forward price-to-earnings ratio is 24.67, compared with Nvidia's 28.17, and AMD's 23.45.

(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Devika Syamnath)

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