Investors are experiencing turbulence in the tech market as shares of Intel (INTC) fell sharply on Friday, tumbling over 17% after the semiconductor leader issued a disappointing sales and profit forecast. The company’s stock price ended the trading day significantly lower, closing at $45.01, with declines attributed largely to supply constraints impacting sales performance.
In the fourth quarter, Intel reported a 4% year-over-year revenue drop, totaling $13.7 billion. This downturn was primarily driven by declining sales in its Client Computing Group, which includes its PC chip business. Conversely, there was growth in Intel’s Data Center and AI division; however, it was not sufficient to offset the overall decline.
Despite the adverse market reaction, Intel managed to report adjusted earnings per share (EPS) of $0.15, surpassing Wall Street’s estimates of $0.08. However, analysts were less than encouraged by the company’s outlook for the upcoming quarter. Intel’s management projected revenue between $11.7 billion and $12.7 billion for the first quarter. The midpoint of this range fell short of analysts’ expectations of $12.5 billion.
Additionally, Intel anticipates breaking even on an adjusted earnings basis for the first quarter, while consensus estimates had expected a profit of $0.05 per share. CEO Lip-Bu Tan expressed disappointment during the earnings call, particularly regarding the company’s inability to meet market demand in the short term.
The ongoing supply challenges raise concerns about Intel’s ambitions to capture foundry customers from competitors like Taiwan Semiconductor Manufacturing Company (TSMC). Establishing a robust chip manufacturing business is critical to Tan’s long-term growth strategy, making these supply issues particularly troubling.
As of the latest trading session, Intel’s market capitalization stands at approximately $271 billion, with today’s trading volume reaching around 12 million shares against an average of 97 million. The stock has fluctuated within a 52-week range of $17.66 to $54.60, reflecting the market’s volatility and the challenges the company is facing.
