Intel share price: Shares of chipmaker Intel suffered a brutal blow in the last trade as investors were not only perturbed by the lower-than-expected performance, layoff announcement and weak outlook but also by the CEO’s future plans.
Lip-Bu Tan, the CEO of Intel, sparked concerns that he was more focused on cost-cutting than restoring the chipmaker’s technological edge. All these factors together pushed the Intel share price 8.53% down to $20.70. The stock, however, showed signs of some gains in the pre-market trade today, July 28, as it gained 0.50%.
Intel Q2 Results
Intel reported a $2.9 billion loss in Q2 as against profit expectations. Moreover, its sales stood at $12.9 billion, little changed from a year earlier, although above Bloomberg analysts’ estimate of $11.9 billion.
In its earnings report, Intel gave an upbeat third-quarter sales forecast while missing estimates for some profit measures, a Bloomberg report said. Margins will be tighter than Wall Street anticipated in the period, and Intel only expects a break-even quarter. Analysts had projected a 4-cent gain on that basis.
Meanwhile, the company CEO, as part of Intel’s second-quarter report, said that Intel will cancel some factory projects and take a more conservative approach to future spending. Tan called the investments begun under his predecessor, Pat Gelsinger, excessive and unwise, according to Bloomberg. However, he struggled to give a clear picture of how he’ll make the company more competitive again.
Tan’s focus is on getting Intel’s financial house in order, a task that has included thousands of layoffs and the slashing of capital spending.
Intel Layoffs
Layoff plans will reduce staff by 15%, Intel said. And the company expects further cuts through attrition and the splitting off of business units, Chief Financial Officer Dave Zinsner said in an interview, reported Bloomberg.
The chipmaker aims to end the year with 75,000 employees, down more than 20% from the end of the June quarter.
Intel Share Price
The Intel share is up just 2% for the year. It has lagged far behind rivals, as AI darling Nvidia has jumped 30% while AMD stock has surged 34%. Intel trades at a 12-month forward price-to-earnings ratio of 42.55 versus 33.90 for Nvidia and 32.12 for AMD, as per Reuters estimates.
According to Anshul Jain, Head of Research at Lakshmishree Investments, Intel stock has been trading in a broad range of 18.5 to 26.5 for the past 50 weeks, with no clear signs of a breakout even after the recent earnings release.
The consolidation has been unfolding on relatively low volumes, suggesting a lack of strong institutional interest or directional conviction, said Jain.
Given the current structure and absence of momentum, he expects the stock to remain range-bound for a few more weeks. Traders should avoid aggressive positions until a decisive move beyond the range, supported by volume, signals the next trend direction, Jain advised.
(With inputs from agencies)
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