Intel's Stumble: The Struggling Chip Giant's Plunge into Potential Loss
Stock prices of Intel have dropped, experiencing a decline.
The PC market's lackluster demand is creating major troubles for US chipmaker Intel. After posting disappointing quarterly results and a dour forecast, Intel's stock nosedived by seven percent in post-market New York trading, and on Friday morning, it dipped further by nine percent on Tradegate. Several analysts slashed their price targets.
In the fourth quarter, revenue slumped by a whopping 32 percent to $14.0 billion, with adjusted earnings per share dropping to a mere $0.10. The company missed analyst projections, which had predicted $14.5 billion in revenue and $0.20 earnings per share. Compared to the previous year, revenue dropped by 28 percent.
The forecast isn't bright: For the first quarter, the company expects revenue to range between $10.5 and $11.5 billion - significantly lower than the predicted $13.9 billion. Instead of the previously anticipated adjusted earnings of $0.24 per share in the first quarter, the company now foresees a loss of $0.15.
Intel CEO, Pat Gelsinger, shared with the Reuters news agency that he anticipates one of the most substantial inventory write-offs the industry has ever witnessed, which considerably impacts the current quarter's expectations.
Analysts at Bank of America lowered their price target from $28 to $25, and JP Morgan also reduced its target, lowering it from $32 to $28.
Börse Online has already downgraded the title to "Watch" and continues to favor Intel's competitor, AMD.
Intel's Financial Performance
Although Intel's Q1 2025 results showed a flat Year-over-Year (YoY) revenue of $12.7 billion[1], non-GAAP EPS amounted to $0.13[1][5]. Aiming for operational efficiency, the foundry division outperformed expectations, generating $4.7 billion in revenue[5].
Intel's Key Challenges
Despite not explicitly mentioning inventory write-offs in Q1 2025 reports, Intel highlighted ongoing efforts to improve operational efficiency[1][3], hinting at possible inventory or production adjustments. CFO David Zinsner pointed out "fluid trade policies" and potential recession risks impacting Q2 projections[4].
Intel's Outlook for Q2 2025
Intel provided a revenue forecast of $11.2–12.4 billion[1][5], much lower than analyst expectations, with GAAP EPS projected at -$0.32 and non-GAAP EPS at breakeven[1][4]. Intel aims to reduce its operating expenses to $17 billion in 2025 and $16 billion in 2026[1][3]. To compete with TSMC, Intel is focusing on advancing its 18A process node[4], though success heavily depends on meeting performance targets.
Market Reaction
Intel's shares fell over 5% post-earnings[5], reflecting market skepticism about near-term revenue resilience amidst the challenging macroeconomic climate. The company's focus on "operational efficiency" suggests further restructuring to combat inventory and margin pressures[1][3].
- Tradegate downgraded Intel's title, expecting further stock dips due to the chipmaker's forecasted loss in the first quarter.
- Analysts at JP Morgan and Bank of America have lowered their price targets for Intel, reflecting concerns about the company's earnings.
- Despite posting a flat YoY revenue in Q1 2025, Intel expects a loss in the first quarter, anticipating one of the industry's substantial inventory write-offs, which significantly impacts its financial performance.
