Intel craters after terrible earnings and catastrophic guidance

Thursday after the closing bell, Intel (INTC) published its Q4 2022 results, below analyst estimates as the chip sector continues to wrestle with sluggish consumer and business demand.

In addition, the management anticipates a Q1 adjusted loss of $0.15 per share. Wall Street estimated a $0.25 per share profit.

“We stumbled … we lost share … we lost momentum,” CEO Pat Gelsinger told investors on a conference call late Thursday. “We think that stabilizes this, we’re (and) going to be building a road map that allows us to regain leadership for the long term in this critical market.”

As a result, the stock price declined more than 10% and opened near $27 on Friday, likely confirming the long-term downtrend.

Disappointing earnings, miserable guidance

In the fourth quarter, Intel had a net loss of $664 million, or 16 cents per share, compared to a profit at the same time last year. The company’s revenue decreased 32% to $14 billion, its lowest level since 2016.

Excluding some factors, earnings per share were 10 cents. Wall Street anticipated a 19-cent profit on $14.5 billion in revenue.

Intel reported a 36% decline in client computing revenue to $6.6 billion, with no overall support from its Data Center and AI sector, whose revenues dropped 33% to $4.3 billion. Network and Edge Group revenue decreased by 1% to $2.1 billion.

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Intel expects sales for the upcoming quarter to decline to between $10.5 and $11.5 billion. Gross margins for the three-month period ending in March are now anticipated to decline to around 34.1%, almost half of the chipmaker’s long-term goal of approximately 60%.

Investors had been bracing for a weak outlook ahead of Intel’s earnings, but “the magnitude of the weaker guidance was quite surprising,” Morgan Stanley analyst Joseph Moore said in a note.

As one of the first big technology companies to release their results, Intel should act as a barometer for the industry. AMD will publish results on January 31, while Qualcomm will do so on February 2. The graphics chip giant Nvidia will release profits on February 22.

Dip buyers to reemerge?

Despite the 10% stock decline today, bulls could quickly reenter the market as the market sentiment remains positive due to the Fed’s easing expectations.

Still, the INTC stock remains within a slow bullish channel, implying further gains as long as the price remains within that channel.