After taking a few steps forward with investors, Intel (INTC) is taking a few steps back.
The company's stock fell 8% on Friday after some issues with its first-quarter results and second-quarter outlook. Although the company managed to beat estimates by $0.05 in first-quarter earnings, its outlook for the rest of the year was below consensus.
“There's a lot of great things happening in the second half of this year, and we're very happy with our outlook,” Intel CEO Pat Gelsinger told Yahoo Finance.
Selling pressure on Intel stock is coming from two areas.
First, the quarter's results were constrained by wafer supply issues that Wall Street was unable to adequately model.
And second, Intel executives are cautious about their outlook for the second quarter because of some soft demand from customers.
Intel expects second-quarter revenue to be between $12.5 billion and $13.5 billion. Analysts had expected $13.63 billion. Earnings are expected to be $0.10 per share, lower than analysts' expectations of $0.24.
“As we begin a multi-year transition phase with high capital intensity and an ambitious design roadmap that anticipates migrating five process nodes in four years, Intel has a difficult path ahead. We think we are waiting,” said Stifel analyst Ruben Roy. Client notes.
Roy maintained his rating on Intel's stock at “hold.”
The company's tepid guidance overshadowed some wins this quarter and over the past two months.
Gelsinger noted that Intel expects to ship more than 40 million AI PCs in 2024, which is a slight upward revision from its previous outlook. Gelsinger added that all of the chips the company plans to release this year are on track.
Intel recently introduced a variety of AI-focused products and services. On display was Gaudi 3, an AI chip for generative AI software that will be released later this year.
The company also announced Core Ultra processors targeted at the aforementioned emerging AI PC market.
And just last month, Intel secured an $8.5 billion grant and an additional $11 billion in loans from the Biden administration to build chip factories in four states. The expansion is part of Intel's goal to become a leading maker of chips for other companies, rivaling No. 1 Taiwan Semiconductors (TSMC).
“While we remain impressed with our current efforts, we plan to launch two data center products and two key customer products across three new manufacturing technology nodes,” said JPMorgan analyst Harlan Sarr. “The next 12 months will be the most difficult for the team.” — but we believe it serves as a strong indicator of the team's ability to execute over the next three to five years. ”
Atmosphere surrounding tech stocks
Intel's below-consensus earnings and lukewarm outlook come as the threat of higher long-term interest rates weighs on once-hot tech stocks like Nvidia (NVDA). Building AI infrastructure can be more expensive than expected, as revealed in the first quarter earnings reports of Meta (META), Alphabet (GOOG, GOOGL), and Microsoft (MSFT).
So what's next for tech stocks? Yahoo Finance dives into the latest episode of the podcast Opening Bid (below).
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Brian Sozzi I'm the executive editor of Yahoo Finance. He is also the host of “.starting bid” Podcast. Follow Sozzi on Twitter/X @BrianSozzi And even more linkedin. Have a tip about a deal, merger, activist situation, or more? Email brian.sozzi@yahoofinance.com. Are you a CEO and would you like to appear on Yahoo Finance Live? Email Brian Sozzi.
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