Intel faces significant market challenges as the tech sector undergoes a massive sell-off. Learn what to expect from Intel’s upcoming earnings report amid new sanctions.
The recent sell-off in the tech sector has cost the chipmaking industry around $500 billion in stock market valuation. The US reportedly plans to ratchet its sanctions against Chinese companies. Techopedia explores how this will impact Intel and what to expect from the upcoming earnings report on August 1.
Intel’s Stock Recent Challenges
Intel’s stock has lost almost half its value since February 2020. For 2023, the Intel Client Computing Group’s (CCG) revenue was $29.3 billion, a 7.9% fall compared to last year. Data centers and AI Group (DCAI) revenues decreased by 25%.
The company downgraded its Q2 earnings per share estimate from $0.10 to $0.08, and revenue is expected to fall to $12.74 billion from $13 billion. The stock has been underperforming compared to its competitors. It is down 37.7% since the start of 2024.
The company seems to be losing investors’ confidence in a series of setbacks. One reason is that Microsoft announced it would stop using Intel and shift to Qualcomm for its new PC device, Surface Copilot+. The launch of its new Meteor Lake processors also hit a wall, as it wasn’t on par with its competitors.
Still, the company has ambitious plans, such as producing half of the global chips in the US and Europe by 2030. In early 2024, the company also announced the launch of the “first systems foundry for the AI era.” However, the company’s foundry business suffered a loss of $7 billion.
As for market share, Statista provides data that Intel processors comprised 63% of all the x86 computer processors sold, compared to 33% from AMD. Moreover, Intel accounted for 71% of all laptop CPU benchmark test results.
Intel Stock Price Prediction
Bernstein’s analysts maintain that they expect lower numbers for Intel next week. However, reduced valuations present an interesting opportunity for investors to buy.
This bullish expectation is based on improved estimates from the CCG and DCAI groups, as the former grew by 31% in Q1. CCG represents half of the company’s total revenue earnings. Moreover, notebook and desktop revenue have grown by 37% and 31%, respectively. Intel has also started to reserve High NA EUV, claiming to be the first company to do so.
According to TipRanks, Intel stock’s valuation is highly lucrative. They expect earnings per share to increase to $1.92 in 2025 and $2.50 in 2026. By 2027, the projected earnings per share are expected to touch $3.18.
In other bullish news, Morgan Stanley expects Intel’s Gaudi 3 chip shipments to generate a revenue of $2-3 billion in 2025. Moreover, DNB Asset Management sold its Nvidia holdings and doubled its purchase of Intel stock.
Analysts at Motley Fool predict that Intel can save around $8 to $10 billion in 2025 with a non-GAAP margin of 60%. Intel is also expected to receive a grant of $8.5 billion as a beneficiary of the CHIPS Act.
Finally, Intel has curtailed its operating expenses by $400 million, combined with a 31% increase in operating cash flow and an almost similar 30% uptick in adjusted free cash flow.
As such, Intel holds a promising future, provided it can meet its revenue and sales targets while keeping further losses at bay. The overall geopolitical landscape and global economic recovery, which are dependent on unwinding the tightening monetary policy, will continue to play a role in determining not only Intel’s but also the whole tech sector’s financial health.