Monitoring Desk
ISLAMABAD/CALIFORNIA: American multinational corporation and technology company Intel Corp (INTC.O) lost about $8 billion in market value on Friday after the US chipmaker stunned Wall Street with dismal earnings projections, fueling concerns about a slump in the personal computer market.
The firm predicted a surprise loss for the first quarter, and its revenue forecast was $3 billion lower than expected, as it also struggled with slowing data center growth. Intel shares fell 6.4%, while rival Advanced Micro Devices (AMD.O) and Nvidia (NVDA.O) gained 0.3% and 2.8%, respectively. KLA Corp (KLAC.O), an Intel supplier, fell 6.9% after issuing a bleak forecast.
Intel’s historic collapse and market value losses
No words can describe or explain Intel’s historic collapse, according to Hans Mosesmann of Rosenblatt Securities, one of 21 analysts who cut their price targets on the stock. The bleak outlook highlighted Chief Executive Pat Gelsinger’s difficulties as he attempts to reestablish Intel’s dominance in the sector by expanding contract manufacturing and constructing new factories in the United States and Europe.
The company has steadily lost market share to competitors such as AMD, which has used contract chipmakers such as Taiwan-based TSMC (2330. TW) to produce chips that outperform Intel’s technology. According to Matt Wegner, an analyst at YipitData, AMD’s Genoa and Bergamo (data center) chips have a significant price-performance advantage over Intel’s Sapphire Rapids processors that should drive further AMD share gains.
Analysts believe Intel will be at a disadvantage even when the data center market bottoms out, which is expected in the second half of 2022 because the company will have lost even more market share by then. According to Bernstein, it is clear why Intel needs to cut so many costs as the company’s original plans prove to be a dream. The magnitude of the deterioration is remarkable, raising concerns about the company’s cash position over time.
Intel, which plans to cut $3 billion in costs in 2023, generated $7.7 billion in cash from operations and paid $1.5 billion in dividends in the fourth quarter. Analysts believe the company should consider cutting its dividend, with capital expenditures expected to be around $20 billion in 2023.
