Earlier this week, Intel (NASDAQ:INTC) won a big victory. Congress passed a bill, known as the CHIPS Act, that will provide $52 billion to support chipmakers. Some view the legislation as “disproportionately” beneficial to Intel, which is planning to invest $20 billion in a new chip factory in Ohio. Nevertheless, INTC stock is tumbling 10% in late-morning trading after the company reported second-quarter results yesterday that came in well below analysts’ average outlook.
Intel’s Q2 Miss
Amid significant slumps in Chromebook and PC sales, Intel reported earnings per share, excluding certain items, of 29 cents, well below analysts’ average estimate of 41 cents. Moreover, its top line sank 17% year-over-year to $15.3 billion versus analysts’ mean estimate of $17.9 billion.
On the guidance front, the chip maker cut its 2022 top-line outlook to between $65 billion and $68 billion. On a somewhat positive note, Intel did back its 2022 free cash flow guidance, excluding some items, of a loss of $1 billion to $2 billion.
Reacting to the results, Intel CEO Pat Gelsinger said, “While we continue to make solid progress on our strategy, Q2 results were disappointing, below the standards we have set for the company and below the commitments we have made to you, our shareholders.” He added, “We believe our turnaround is clearly taking shape and expect Q2 and Q3 to be the financial bottom for the company.”
One Analyst Is Extremely Bearish on INTC Stock
“While some investors could potentially see a kitchen sink in the results, it seems more likely that things are circling the drain,” stated Bernstein’s Stacy Rasgon in reference to Intel’s Q2 results. “Of course outlook for a Q4 snapback could prove dangerous should the macro continue to worsen, and while the company did bring their PC market expectations down this year (to -10%) the state of PCs into 2023 & beyond remains nebulous.”
Labeling Intel’s results “the worst we have seen in our career,” Rasgon warned that its data center unit is likely to be obliterated by its competitor when it comes to the server market. The analyst kept an “underperform” rating on the shares and slashed the firm’s price target on INTC stock to $30 from $35.
On the date of publication, Larry Ramer held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.