Intel Shares Experience Worst Day Since 2020 Amid Disappointing Outlook

Chipmaker’s Forecast Falls Short of Analyst Estimates, Prompting Steepest Drop in Stock Since July 2020

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Intel, the semiconductor giant, witnessed a sharp decline of 12% in its shares on Friday, marking the most significant drop since July 2020. The substantial sell-off followed the company’s release of an earnings report that beat profit and revenue expectations but provided a current-quarter forecast that fell far below analysts’ estimates.

In the earnings report published late Thursday, Intel disclosed that it anticipates adjusted earnings of 13 cents per share for the current quarter, with sales projected to be between $12.2 billion and $13.2 billion. This guidance significantly trailed analysts’ expectations, who were foreseeing earnings of 33 cents per share on $14.15 billion in revenue, as reported by LSEG, formerly Refinitiv.

The weakness in Intel’s revenue guidance for the first quarter was notable, with every analyst’s estimate falling below the company’s projection, according to CNBC research.

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Despite some segments of the semiconductor industry thriving due to robust demand for artificial intelligence chips, Intel faces challenges in other areas, particularly with its central processing units (CPUs) for servers. The consensus among analysts for Intel’s earnings in the subsequent quarters of 2024 also experienced a downward adjustment following the disappointing forecast.

Intel CEO Patrick Gelsinger acknowledged on the earnings call that the first-quarter sales performance would be impacted by weakness in Mobileye, where Intel holds a majority stake, as well as in the company’s programmable chip unit. However, Gelsinger expressed confidence in the health of Intel’s core businesses related to PC and server chips, noting that sales in these segments would be at the lower end of the seasonal range.

Deutsche Bank analyst Seymour Ross, while acknowledging the negative impact of the substantial miss, expressed some encouragement, stating that the drivers of the incremental weakness appear to be largely outside of Intel’s core PC and data center CPU segments.

As of Friday afternoon, Intel shares were trading at $43.68, reflecting a 13% decline for the year after nearly doubling in value over the course of 2023. The stock’s performance is closely monitored by investors and industry observers, given Intel’s prominent position as a major player in the global semiconductor market.