Intel posted June-quarter financial results that fell far short of Wall Street estimates.
David Paul Morris/Bloomberg
Bernstein doesn’t believe Intel ’s troubles are behind it after the chip maker unveiled a historically terrible second-quarter earnings report.
On Thursday, Intel (ticker: INTC
) posted June-quarter financial results that fell far short of Wall Street estimates. It provided a bleak outlook for the current quarter and materially reduced its forecast for the full year.
A day later, Bernstein analyst Stacy Rasgon lowered his price target for the chip maker’s shares to $30 from $35, citing the company’s deteriorating business. He also reaffirmed his Underperform rating on the stock.
“Intel’s Q2 takes the prize for the worst we have seen in our career,” he wrote. “While some investors could potentially see a kitchen sink in the results, it seems more likely that things are circling the drain.”
Intel stock was down 8.4%, at $36.38, in recent trading. The S&P 500 was up 0.8%.
The analyst said Intel’s second-quarter revenue fell 17% compared with its first quarter, making it the worst sequential performance for the company going back at least to the year 2000.
He highlighted Intel’s commentary on its earnings call with investors on Thursday about the delayed launch of the company’s next-generation server chip named Sapphire Rapids and how it wouldn’t ship in volume until next year.
Intel also said on the call its data-center server chip business would grow slower than the overall data-center market for the next two years. The news adds to Wall Street’s concerns over further share losses to its main rival Advanced Micro Devices ( AMD
).
“Frankly it seems likely that their competitor is about to destroy them on server share,” Rasgon wrote.
Intel declined to comment on the Bernstein analyst’s note. Instead, it pointed to management’s comments during the Thursday earnings call for context on the second quarter and the company’s long-term opportunities.
Last month, Barron’s repeatedly cautioned investors over the risk that Intel could miss its financial guidance by a significant amount, given its product delays and the rapidly deteriorating macro environment. We also warned about the high likelihood the company would lose further share in the server chip market, citing AMD’s better-performing products and its timely pipeline.
With Intel now confirming all of these problems, the company’s investors need to prepare themselves for more turbulence the rest of the year.
Write to Tae Kim at [email protected]
