The Reasons Behind the Drop in Intel Stock This Morning



On Thursday morning, shares of Intel (NASDAQ:INTC) were trading at a discount of up to 2.4% shortly after the market opened. However, as of 10:48 a.m. Eastern Time, the stock has given up only 0.23% of those gains and has regained the majority of those losses.

The company’s management reported its near-term demand trends on Wednesday at an investor conference, which may have contributed to the stock’s downward trend. In this context, Samsung Electronics has issued a grim warning that the semiconductor market may not recover much even in 2023.

The price of Intel (NASDAQ:INTC) stock has been moving steadily lower during the year. The Intel (NASDAQ:INTC) shares price have decreased by 41% this year, with most of those losses occurring in only the most recent few months. Would it be possible for the stock to recover from these lows? The management suggested that demand would level out in the fourth quarter.

Then what?

As 2022 began, Intel possessed the optimistic outlook that the demand it had witnessed in 2021 would continue. However, consumer PC demand has plummeted, and the slump has only worsened since the beginning of the second quarter.

The enterprise sector has also begun to experience some of the downturns that have been sweeping the economy. In the second quarter, Intel reported a decrease in non-GAAP (adjusted) revenue of 17% year over year, with the data center and artificial intelligence segment showing a fall of 16%.

What’s Next?

Pat Gelsinger, the CEO of Intel (NASDAQ:INTC), stated on Wednesday that the demand for semiconductors has been lower than initially anticipated while speaking at the Evercore TMT conference. In Intel’s projection for the third quarter, revenue was expected to land between $15 billion to $16 billion, a decrease from the $17.3 billion it generated in the third quarter of 2021. During the conference, Gelsinger cautioned the investors by stating that revenue has been trending toward the lower end of that range in the current quarter. He remarked that the environment was quite dangerous.

To look on the good side, Gelsinger stated that the company is now shipping less volume than the demand in the market, which indicates that inventory channels are likely to become light very soon and will need to be replenished. Gelsinger pointed out that this should contribute to better growth beginning in the fourth quarter.

When Intel (NASDAQ:INTC) is still suffering market share declines relative to its competitors, it is tough to say that the stock is a genuine bargain.

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.