The BareStory
Intel shares declined significantly in after-hours trading on Thursday, reversing sharp gains from earlier in the week, after the company issued a first-quarter outlook that fell short of market expectations. While the chipmaker’s fourth-quarter results surpassed analyst projections, it forecast current-quarter revenue between $11.7 billion and $12.7 billion with breakeven adjusted earnings per share. This guidance missed estimates, triggering a stock drop of as much as 13% immediately following the report.
For the fourth quarter, Intel posted adjusted earnings of 15 cents per share on $13.7 billion in revenue. However, the company reported a net loss of $600 million, widening from a $100 million loss in the same period a year ago. Segment results were mixed: revenue from the Data Center and AI division grew 9% year-over-year to $4.7 billion, while the Client Computing Group, which includes laptop chips, saw sales fall 7% to $8.2 billion. Finance Chief David Zinsner stated that the soft guidance was partly due to supply shortages, though he indicated availability should improve in the second quarter.
CEO Lip-Bu Tan told analysts the company is working to enhance production efficiency to meet demand. Tan noted that while manufacturing yields align with internal plans, they currently remain below his targets. The post-earnings decline followed a rally on Wednesday, when stock prices rose approximately 11% amid optimism regarding Intel’s server chips and 18A manufacturing technology. Over the past year, the company has secured major capital support, including a substantial investment from the U.S. government and a $5 billion stock sale to Nvidia that was completed during the quarter.
How it may affect me
As a U.S. reader:
• Investors with portfolios containing tech stocks or index funds may face volatility after the company reported widening losses and a significant drop in share price.
• Consumers looking for laptops may encounter supply constraints or shifting availability as the company manages shortages and declining sales in its personal computing division.
• Taxpayers may track the outcome of government spending as the chipmaker utilizes substantial federal investment while navigating financial losses and manufacturing yield challenges.
• The expansion of data center and AI revenue indicates continued development of infrastructure supporting artificial intelligence tools, contrasting with a slowdown in the personal computer market.
