Intel (NASDAQ:INTC) stock is tumbling after the company provided dismal guidance that greatly undermined Wall Street’s confidence in its shares. INTC stock currently sits about 10% down in today’s premarket trading.
In response to the company’s poor outlook, the shares of a number of other chipmakers, including AMD (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA), are dropping today.
INTC Stock and Intel’s Poor Guidance
Hurt by rapidly sinking PC sales and its declining revenue from data centers, Intel predicted that its first-quarter revenue would plunge 40% year-over-year to roughly $11 billion. Moreover, the chipmaker warned that its gross margin would tumble to 34.1% this quarter from 55.2% in Q1 of 2021, when the company’s current CEO, Pat Gelsinger, took the helm at Intel. Finally, Intel predicted that, excluding certain items, it would lose 15 cents per share in Q1.
Intel reported that its customers have stockpiled more chips than they can use, causing them to buy many fewer of Intel’s products. Gelsinger also blamed macroeconomic issues for the company’s woes. Indeed, China’s extended lockdowns, the massive shift of consumers’ spending from goods to services, the partial reversal of the work-from-home trend, and the negative impact of higher interest rates on some tech companies have likely all played significant roles in creating Intel’s current woes.
On a positive note, however, the CEO reported that the macro picture may rebound in the second half of this year. Additionally, Gelsinger stated that “We…remain confident in our long-term plans and trajectory.” However, citing the uncertain macro outlook, INTC declined to provide full-year guidance.
Analysts React Negatively to Intel’s Outlook
Calling the plunge of Intel’s financial results “stunning,” Stacy Rasgon, an analyst at investment bank Bernstein, wrote that a “significant cash burn” may be in the company’s future. He kept an “underperform” rating on the name.
And John Viun, an analyst at KeyBanc, predicted that “2023 will be another challenging year with limited catalysts [for Intel].”
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
