Semiconductor giant Intel has disappointed Wall Street with its outlook for the current quarter.
Intel forecast revenues of between $12.2 and $13.2 billion for the current quarter. Analysts on average had expected a good $14 billion. The forecast for adjusted earnings per share also remained well below expectations.
The forecast shows that Intel CEO Pat Gelsinger still has a lot of work to do in transforming the once-dominant chip company. The competition is not only strong when it comes to technology for data centers. Gelsinger wants to turn things around with new production processes for more efficient chips.
In the last quarter, Intel increased sales by ten percent year-on-year to $15.4 billion (14.2 billion euros), slightly exceeding market expectations. The bottom line was a profit of $2.7 billion after a loss of $700 million in the same quarter last year.
The development of individual divisions shows where the problems lie. With the recovery of the computer market, revenue from PC processors rose by a third to $8.8 billion. Gelsinger assumes that sales of personal computers will rise again to around 300 million devices per year. Intel wants to boost sales with the concept of the “AI PC,” which is said to be particularly well designed for applications with artificial intelligence.
In the data center technology business, however, sales fell by ten percent to four billion dollars. That was below analysts’ expectations. Intel’s smaller rival AMD (AMD (Advanced Micro Devices)) recently caused problems here. In addition, with the increasing use of applications based on artificial intelligence, the semiconductor company NVIDIA is on the rise with its specially designed chips.
Outlook causes Intel shares to take a setback in the upward trend
A disappointing business forecast is likely to cause the share price to collapse on Friday. In premarket trading on the Nasdaq it fell by more than eleven percent to $44. This means that the good start to 2024 is already a waste. The securities of the manufacturer of semiconductors, data centers and software fell to a low since mid-December.
“With Intel, the current reporting season has the next big disappointment,” wrote market expert Thomas Altmann from asset manager QC Partners. The industry giant forecast revenues of between $12.2 and $13.2 billion for the current quarter. Analysts had expected on average a good 14 billion. The forecast for adjusted earnings per share also remained well below expectations.
Market strategist Jürgen Molnar from broker Robomarkets explained: “Intel is also ensuring long faces on the stock market because investors have determined the chip sector to be one of the favorites for 2024 following the optimistic outlook of its Asian competitor TSMC.” The question now is whether home-made problems at Intel are causing reluctance or whether the view of the expected global chip demand needs to be sharpened again.
According to tech expert Timothy Arcuri from UBS bank, Intel’s statements offered light and shadow. The negative thing is that the targets for the current first quarter fell short of the assumptions of most market players. The good news is that Intel appears to be getting its balance sheet risks under control for the rest of the year. Management statements in a conference call would also have increased the likelihood that Intel could split into two companies – a scenario that Arcuri has long favored.
In view of the price setback, one should not completely ignore the fact that Intel shares have performed excellently in the past few months. While the shares were hovering below $25 almost a year ago, they have doubled in value since then. There were significant setbacks several times during this upward phase, but they were repeatedly used for purchases. p>SANTA CLARA / NEW YORK (dpa-AFX)
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