Intel Posts Q1 Beat On Data Center Growth But CEO Tan’s Changes Loom
Intel continues to embark on a major turnaround effort that began under the guidance of former CEO Pat Gelsinger and is now the responsibility of his recently appointed replacement, Lip-Bu Tan. It will take some time to assess Tan's performance as head of Intel. In the meantime, Intel posted financial results for the first quarter of 2025, with revenue outpacing guidance.
That said, Intel's Q1 revenue was also flat year-over-year at $12.7 billion. Net income came in at an $821 million loss for the quarter, compared to a $381 million loss in the same quarter a year ago, underscoring that there's a lot of work to be done to right the ship. From Tan's vantage point, however, Intel is on the right course.
"The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to
gaining market share and driving sustainable growth," Tan said in a statement. "I am taking swift actions to drive
better execution and operational efficiency while empowering our engineers to create great products. We are going
back to basics by listening to our customers and making the changes needed to build the new Intel."
The "no quick fixes" mantra was one that Tan repeated in expanded comments (PDF) during a conference call with investors. He also made clear that more layoffs are coming as Tan looks to simplify the company's business operations with smaller, more nimble teams that report directly to him rather than through several layers of management.
"As a first step, I have flattened the structure of my leadership team. All critical product,
manufacturing and G&A (general and administrative) functions, which were spread over two or
three layers, are now directly reporting to me. This will allow me to get closer to our product and
engineering groups and work directly with them to close gaps with competition more quickly," Tan said.
Looking at Intel's individual product categories, its Client Computing Group (CCG) fell 8% year-over-year to $7.6 billion, even though PC shipments have been soaring as OEMs look to stockpile hardware ahead of more tariffs.
Outside of its consumer business, Intel saw an 8% gain in its lucrative Data Center and AI (DCAI) division, which added $4.1 billion to the company's bottom line. Likewise, Intel Foundry was up 7% at $4.7 billion, while all other segments collectively grew 47% year-over-year to $900 million, Intel revealed in its latest earnings report.
Looking ahead, Intel's Chief Financial Officer (CFO) David Zinser said during a conference call that Intel anticipates revenue for the current quarter to be at the midpoint of its guidance as $11.8 billion. The weak guidance is probably why Intel's share price dipped in after market hours, though it's showing signs of climbing back up this morning.
All eyes are now on Tan to see if he can restore Intel to its former glory days. In an open letter to employees, he doubled down on returning Intel to its roots as an engineering-focused company, part of which entails "flattening the organization."
