Intel (INTC) saw a sharp decline in its stock price after failing to meet its forecast for the current quarter. The company’s stock dropped by over 11% following this news.
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The Santa Clara, California-based company revealed that it had achieved adjusted earnings of 54 cents per share on sales of $15.41 billion in the December quarter. This fell short of analysts’ expectations of 45 cents per share on sales of $15.16 billion, as per FactSet. In the same period last year, Intel saw earnings of 10 cents per share on sales of $14.04 billion.
This report marked a turnaround for Intel after experiencing eight consecutive quarters of declining earnings and seven consecutive quarters of declining sales year-over-year.
However, the outlook for the first quarter of the year is not positive, with Intel predicting adjusted earnings of just 13 cents per share on sales of $12.7 billion. Analysts had been expecting earnings of 34 cents per share on sales of $14.24 billion for the March quarter. In the first quarter last year, Intel suffered a loss of 4 cents per share on sales of $11.72 billion.
Additionally, according to generally accepted accounting principles (GAAP), Intel is anticipating a loss of 25 cents per share in the first quarter.
Demise of Intel Stock
At midday on the stock market on Friday, Intel stock plunged by 11.4% to 43.92.
Intel stock signaled a sell-off as it dropped below its 50-day moving average line, a crucial level of support, amidst heavy trading volume.
On November 15, Intel stock broke out of a nine-week consolidation pattern at a buy point of 40.07, as per IBD MarketSmith charts.
Following the report, a number of Wall Street analysts either downgraded Intel stock or lowered their price targets for it.
Weak Data Center Sales
Intel’s improved performance in Q4 was primarily driven by a resurgence in its PC business. The company’s Client Computing Group reported a 33% rise in revenue to $8.8 billion.
Although Intel’s overall revenue increased by 10% year-over-year, it was offset by declines in data center and networking chip sales, amidst gains in PC chip sales.
Intel’s Data Center and AI unit experienced a 10% decline in sales to $4 billion in the fourth quarter, while the Network and Edge business reported a 24% drop in sales to $1.5 billion.
In addition, Intel announced a foundry collaboration with contract chipmaker United Microelectronics (UMC), focusing on the development of a 12-nanometer semiconductor process platform for high-growth markets in mature nodes including mobile, communication infrastructure, and networking.
Following the disappointing earnings report, other semiconductor stocks, such as Intel spinoff Mobileye Global (MBLY) and European chipmaker STMicroelectronics (STM), also reacted. Both companies reported their Q4 results before the market opened on Thursday.
Mobileye’s forecast for 2024 sales of $1.9 billion was below estimates, despite delivering fourth-quarter results in line with its preliminary results provided on January 4. It earned an adjusted 28 cents per share on sales of $637 million in the December quarter, with a 4% increase in earnings and a 13% rise in sales year-over-year.
STMicro’s Q4 earnings were better-than-expected alongside roughly in-line sales. However, its guidance was relatively weak, with earnings declining by 14% and sales by 3% year-over-year. For the first quarter, STMicro predicted sales of $3.6 billion, missing the consensus target of $4.08 billion.
Despite this, Mobileye stock rose by 1.2% to 27.95, while STMicro shares declined by 0.8% to 45.60 on Thursday.
Intel Stock Ratings
IBD Stock Checkup ranks Intel stock fifth out of 32 stocks in the semiconductor manufacturing industry group, with an IBD Composite Rating of 78 out of 99.
STMicro is ranked tenth in the chipmaker group with a Composite Rating of 63.
In the fabless semiconductor industry group, Mobileye is ranked seventeenth with a Composite Rating of 62.
For more stories on consumer technology, software, and semiconductor stocks, follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz.
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