After several steps forward with investors, it’s a few steps back for Intel (INTC).
Shares of the chipmaker fell 8% on Friday, following several hiccups in its first quarter results and second quarter guidance. While the company’s first quarter earnings managed to surpass forecasts by $0.05, its guidance for the rest of the year came below consensus.
“We have a lot of great things happening in the second half of the year. We feel very comfortable with the outlook we have,” Intel CEO Pat Gelsinger said to Yahoo Finance.
The selling pressure on Intel’s stock stems from two areas.
First, results for the quarter were constrained by a wafer supply issue that Wall Street failed to properly model.
And second, there was some demand softness from customers — which is causing Intel execs to be on the cautious side for the second quarter guidance.
Intel expects second quarter sales of between $12.5 billion and $13.5 billion. Analysts were anticipating $13.63 billion. Earnings are projected at $0.10 per share, short of analyst forecasts for $0.24.
“We believe Intel has a difficult road ahead as the company begins a multi-year transition phase which involves high capital intensity and an ambitious design roadmap with expectations to move through five process node transitions in four years,” Stifel analyst Ruben Roy said in a client note.
Roy maintained a Hold rating on Intel’s stock.
The company’s tepid guidance overshadowed a couple of wins in the quarter and in the past two months.
Gelsinger noted Intel expects to see more than 40 million shipments of AI PCs in 2024, a slight upgrade from his prior outlook. All of the company’s planned chip launches for the year remain on track, Gelsinger added.
Intel recently showcased a range of AI-focused products and services. On display was Gaudi 3, an AI chip for generative AI software that will become available later this year.
The company has also unveiled its Core Ultra processor, which will target the aforementioned emerging AI PC market.
And it was just last month that Intel won $8.5 billion in grants and another $11 billion in loans from the Biden administration to build semiconductor plants in four states. The build-outs are part of Intel’s goal to become a leading maker of chips for other companies, rivaling No. 1 player Taiwan Semiconductors (TSMC).
Said JPMorgan analyst Harlan Sur, “Although we continue to be impressed by the current execution, the next 12 months will be the most difficult for the team as they will be launching two data center products and two major client products over three new manufacturing technology nodes — however, we believe it will serve as a strong proxy on the team’s ability to execute over the next 3-5 years.”
The vibe around tech stocks
Intel’s below-consensus earnings and tepid outlook arrive as the threat of higher for longer interest rates weighs on once-hot tech stocks like Nvidia (NVDA). Building out AI infrastructure can also be more costly than expected, as articulated on first quarter earnings call from Meta (META), Alphabet (GOOG, GOOGL), and Microsoft (MSFT).
So what’s the next move in tech stocks? Yahoo Finance dived in on the latest episode of the ‘Opening Bid‘ podcast (below).
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Brian Sozzi is Yahoo Finance’s Executive Editor. He is also the host of the ‘Opening Bid‘ podcast. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to come on Yahoo Finance Live? Email Brian Sozzi.
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