Intel shares plunge over 10% as sales fall short of estimates

The company employs 5,000 people in Ireland

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 has not yet taken off.

Shares in Intel, which employs 5,000 people in Ireland, plunged more than 10%, renewing doubts about a long-promised turnaround at the once-dominant chipmaker.

Intel’s first-quarter projection for both sales and profit came in well short of Wall Street estimates, and executives struggled to soothe concerns during a conference call with analysts.

The outlook suggests that chief executive Pat Gelsinger still has a long way to go in restoring Intel’s former prowess. 

Though the chipmaker’s personal computer business is recovering, demand is weakening in the lucrative market for data center chips.

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 has not yet taken off.

The stock was already down 1.4% so far this month, trailing a 7.1% advance by the closely-watched Philadelphia Stock Exchange Semiconductor Index.

Wells Fargo analyst Aaron Rakers called the selloff justifiable, and said questions remain about when it “will find its footing as competitors capitalise on an ongoing AI server capex cycle.” 

Sales in the first quarter will be $12.2bn (€11.2bn) to $13.2bn, the California-based company said.

That compared with an average analyst estimate of $14.2bn, according to data compiled by Bloomberg. 

Profit will be 13c a share, minus certain items, versus a projection of 34c.

During the conference call, Mr Gelsinger acknowledged that the first quarter was not 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 is 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 centers.

“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