Intel shares slumped more than 7 per cent premarket on Friday after a downbeat second-quarter sales forecast signaled that the boom in AI technology was diverting enterprise spending away from its traditional data center and PC chips.
The stock has fallen around 30 per cent so far this year as Intel trails rival chip companies like Nvidia in producing advanced artificial intelligence (AI) chips and components.
Intel forecast 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 they can to try to repair things, it is clear that the company is profoundly broken, and it will take years to see the fruits of their (currently exhaustive) labor,” Bernstein analysts said in a note.
Intel is planning a $100 billion spending spree across four U.S. states to build and expand factories. It also unveiled a new AI chip earlier this year in an effort to keep up with competition.
Businesses have prioritized spending on advanced and speedy AI server chips, hurting demand for Intel’s central processing units (CPUs), which have been the mainstay chip powering data centers for decades.
However, the company is optimistic that a fresh upgrade cycle for personal computers around a new version of Microsoft’s Windows operating system will help PC sales in the second half of the year. That could translate to more demand for the Intel chips used in those devices.
The company’s report on Thursday contrasted strong results from Microsoft and Alphabet-owned Google, which are clients of AI chip leader Nvidia and also design in-house chips for their data centers.
