Intel boss calls share rout ‘overstated’ after worst decline since 2020

Intel tumbled the most in more than three years after delivering a disappointing forecast, a reaction that chief executive Pat Gelsinger said on Friday was overblown.

The shares fell as much as 13 per cent to $43.35 (€39.94) in New York after Intel’s first-quarter projection for both sales and profit came in well short of Wall Street estimates. It was the biggest intraday decline since July 2020.

The outlook sparked fears that Mr Gelsinger’s long-promised comeback bid has gone off track. Though the chipmaker’s personal computer business is recovering, demand is weakening in the lucrative market for data centre processors. Intel also is contending with a slowdown in programmable chips and components for self-driving vehicles, and a fledgling business that makes semiconductors for other companies hasn’t yet taken off.

Mr Gelsinger said the market reaction to Intel’s forecast was “overstated” and pointed to better-than-expected results in the fourth quarter. “Q4 beat on top and bottom line, finishing a year that was comfortably ahead,” he said in an interview on Bloomberg Television. “It’s showing the transformation journey that we’re on.”

Intel’s most recent Fab expansion in Kildare is on track to lift its total number of Irish-based employees to 6,500.

Intel’s stock was already down 1.4 per cent so far this month, trailing a 7.1 per cent advance by the closely watched Philadelphia Stock Exchange Semiconductor Index.

Sales in the first quarter will be $12.2 billion to $13.2 billion, the company said Thursday. That compared with an average analyst estimate of $14.25 billion, according to data compiled by Bloomberg. Profit will be 13 cents a share, minus certain items, versus a projection of 34 cents.

Wells Fargo analyst Aaron Rakers called the post-earnings sell-off justifiable, and said questions remain about when Intel “will find its footing” as competitors benefit from spending on AI computing.

During a conference call with analysts, Mr Gelsinger acknowledged that the first quarter wasn’t going as well as hoped, but that he expected the rest of 2024 to improve quarter by quarter. Intel’s efforts to return to the cutting edge of manufacturing are still on track, he said. That’s crucial to improving its products and staying competitive. He also asserted that the chipmaker is no longer losing sales to competitors in PCs and data centres.

“We know we have much work in front of us as we work to regain and build on our leadership position in every category in which we participate,” Mr Gelsinger said. – Bloomberg