Intel Corp. is navigating a tumultuous period as its stock experiences a significant downturn following its recent earnings report. The decline, marked by about a 9% drop in midday trading on Friday, comes as the company fell short of market expectations with its revenue and margin outlook for the current quarter. This downturn represents the second notable post-earnings selloff for Intel in as many quarters, highlighting the ongoing challenges the company faces in meeting investor expectations.
In 2024, Intel finds itself among the worst performers in the S&P 500, with its stock price plummeting by approximately 36% since the beginning of the year. Analysts express deep concerns about Intel’s near-term prospects, with Stacy Rasgon from Bernstein characterizing the situation as “extremely challenged.” He emphasizes that while Intel’s management is actively working to address the issues, the company is grappling with execution difficulties and structural headwinds that may take considerable time to resolve fully.
Tristan Gerra from Baird shares similar concerns, particularly regarding Intel’s ability to achieve gross-margin expansion amid rising startup costs. Additionally, there are worries about the impact of the booming artificial intelligence sector on Intel’s core business, with investors fearing that GPUs may increasingly dominate AI budgets at the expense of Intel’s CPUs.
Despite the prevailing pessimism among some analysts, Ben Reitzes from Melius Research maintains a more optimistic outlook for Intel’s future. He believes that the latter half of the year could bring about improvements for the company, driven by potential factors such as a corporate PC refresh and stabilization in the traditional server business. Moreover, Intel’s Gaudi 3 accelerator revenue is expected to surpass $500 million this year, signaling positive momentum heading into 2025.
While Intel is facing significant challenges and skepticism from certain quarters, some analysts remain bullish on the company’s long-term prospects. They point to the potential for improvement in the latter part of the year, as well as positive developments in key areas such as AI accelerators, as reasons for optimism about Intel’s future performance and market position.