(Reuters) – Intel shares fell more than 12% on Friday after downside forecasts suggesting the AI boom is diverting corporate spending away from traditional data center chips.
Intel has lagged rival chip companies such as Nvidia in producing advanced artificial intelligence (AI) chips and components, and its stock has fallen about 30% since the beginning of the year.
Intel expects second-quarter revenue of $12.5 billion to $13.5 billion, compared with analysts' average estimate of $13.57 billion, according to LSEG data.
“While we believe they are doing everything in their power to fix things, it is clear that the company is deeply broken and their (current It will take years to see the fruits of that strenuous labor.”
Intel plans to spend $100 billion to build and expand factories in four U.S. states. The company also announced a new AI chip earlier this year to keep up with the competition.
Friday's decline will wipe out nearly $19 billion of the company's market value, which was $149.4 billion at Thursday's close.
Businesses are prioritizing spending on advanced, fast AI server chips, hurting demand for Intel's central processing units, the flagship chips that power data centers.
Although we are encouraged by the launch of Intel's AI chip Gaudi 3, we are concerned that the company will continue to cede wallet share in the overall data center computing market to the likes of Nvidia and Arm, Goldman Sachs said. said the analyst.
Still, Intel is optimistic that a new upgrade cycle for personal computers, centered around new versions of Microsoft's Windows operating system, will help boost PC sales in the second half of this year. This could lead to increased demand for the company's chips used in those devices.
The company's earnings contrasted with the strong performance of Nvidia customers Microsoft and Alphabet, which also designs their own chips for data centers.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Devika Shamnath)
