Intel shares have taken a significant dip this week following the company's quarterly earnings report. Intel missed revenue targets last quarter and the company has also cut down its earnings predictions for the rest of the year.
As reported by the Financial Times, Intel's stock dropped by around 10 percent during after-market trading yesterday. While Intel enjoyed a surge in sales during 2020 and 2021 due to the COVID-19 pandemic and a big push to working from home, sales have slowed this year. According to Intel's report, there was a 25 percent decline in consumer chip sales last quarter, and that the total PC market has also shrunk by 10 percent this year.
During the earnings call, Intel CEO, Pat Gelsinger, said that some of Intel's largest customers are “reducing inventory levels at a rate not seen in the last decade”. Due to the shrinking PC market, Intel's revenue was down by 22 percent in Q2 and there was a huge decline in profit compared to Q2 2021.
Intel also reported spending $500m on its Intel Arc graphics launch, and added that it likely won't meet its target of shipping four million GPUs by the end of the year. However, Intel says its graphics business is on track to reach $1 billion in revenue this year.
Gelsinger expects Q2 and Q3 to be the “financial bottom” for Intel, so we should see the company start to rebound in Q4.
Discuss on our Facebook page, HERE.
KitGuru Says: Intel has hit a bump in the road, but the company still made over $15 billion in Q2. Intel has new desktop graphics cards and a new generation of Core processors on the way before the end of the year, so it will be interesting to see Q3 and Q4 results in the months ahead.