On Thursday, the stock market’s closing bell struck out as a sore thumb for semiconductor and chipmaker giant Intel’s financials. Intel’s stock performance took a trouncing, despite beating analysts’ expectations on revenue and losing less per share. Across the board, Intel’s Q1 loss of revenue capitulated a quivering 36 percent, from $18.4 billion to $11.7 billion.
Other prominent company shares that dipped, or wielded a win for a short spell were Amazon, Pinterest, and Snap.
Amid inflation and tightening monetary policies, the Andy Jassy-led Amazon had conducted nearly 27,000 job cuts over the past few months. Amazon’s shares leapt after the quarter results of the e-commerce giant, but the post-market gains were redacted when cautions around its cloud unit arose. The company expects second-quarter net sales to land between the range of $127 – $133 billion, against the estimated consensus of $130 billion.
Pinterest shares dipped 9 percent after announcing an advertising partnership with Amazon and its first-quarter results. The company is hopeful for a lucrative second quarter based on increasing its monthly active users by 7 percent to 463 million year-over-year, surpassing Wall Street estimates of 454.6 million.
The other chipmaker sailing in the same tumultuous ship as Intel, is Samsung with its Q1 financial results foraying memory chip division losses.
Intel’s first-quarter financial performance paraded an annual reduction in earnings per share by 133 percent. Businesses are pulling back on spending and the chipmaker is struggling with a steep decadence in its PC and data center sales.
Intel’s share price has been dwindling alongside its diminishing sales, also being the semiconductor’s fifth consecutive quarter of falling sales – Intel’s biggest quarterly loss of all time. Is Intel going bankrupt?
Intel’s Stock Performance Suspicions: Is Intel In Trouble?
Intel’s Q1 loss resulted in its shares plunging by 1.7 percent whilst undergoing a blazing trail to regain market share – a turnaround plan by CEO Pat Gelsinger. Although Intel’s share price is up over 12 percent so far in 2023, many Silicon Valley investors are cudgeling their brains over if Intel is a good investment now, or has bottomed out, down over 35 percent since last year.
In Gelsinger’s third year at the helm of Intel, he has been planning to transform Intel’s factories into those which can make chips for other companies. By 2026, Intel hopes to achieve its pipe dream of manufacturing advanced chips, analogous to that of TSMC in Taiwan or Apple’s A-series chips in iPhones.
“We still have more work to finish as we reestablish process, product, and cost leadership – and we will continue to provide evidence points each quarter.”
– Gelsinger on an earnings call
But the server chip division of Intel’s Data Center and AI segment weathered a drastic decline by 39 percent to $3.7 billion. This segment is continuing to lose market share owing to several factors of market contraction and competitive pressures.
Intel’s stock performance is majorly concomitant to the slowdown in the overall PC market. According to Gartner, global PC shipments collapsed a queasy 30 percent year-over-year in the first quarter of 2023, to 55.2 million units. Intel is keeping the PC market bearish on its prospects in defiance of its latest price-target raise on the stock.
“We are seeing increasing stability in the PC market with inventory corrections majorly proceeding as anticipated.”
On a final note, while Intel is no longer the 300-pound chipmaking gorilla it used to be, the world has been moving away for a decade from Intel’s bread-and-butter business of PCs. Intel is struggling to stay afloat.
