Intel stock down over 11% in premarket trading following wide earnings miss

Intel (NASDAQ: INTC) stock is reeling in premarket trading after the chip giant missed its second-quarter earnings results. In sum, the firm posted revenues of $15.3 billion, a reduction of -17.3% year-on-year (YoY), missing estimates by $2.63 billion. Further, the earnings per share (EPS) were $0.29, missing estimates by $0.41.

Data center revenue decreased by 16% YoY, while the most significant segment, client computing (PC business), accounted for $7.7 billion in sales but still recorded a drop of 25% YoY.

CEO Pat Gelsinger was unhappy with the results, claiming they were below Intel standards and shareholders’ expectations for the company. Gelsinger explained the results in part with a ‘rapid decline’ in economic activity and the other part with their execution issues.  

“We are being responsive to changing business conditions, working closely with our customers while remaining laser-focused on our strategy and long-term opportunities. We are embracing this challenging environment to accelerate our transformation.”  

INTC chart and analysis

Year-to-date (YTD) INTC shares are down over 25%, maintaining a negative long-term trend. Over the last month, the stock traded between $35.05 and $40.73 range, staying at the lower range of its 52-week price movement. 

The support level is now at $33.66 while resistance has moved to $36.33. 

Meanwhile, TipRanks analysts rate the shares as a hold, seeing the average price in the next 12 months reaching $41.36, 4.16% higher than the current trading price of $39.71.

David Zinsner, Intel’s CFO sounded more optimistic pointing out that Intel will return its gross margins to its target range by the fourth quarter. 

“We are taking necessary actions to manage through the current environment, including accelerating the deployment of our smart capital strategy, while reiterating our prior full-year adjusted free cash flow guidance and returning gross margins to our target range by the fourth quarter.”

Supply chain issues, rising energy prices, and inflation are slowly working their way into company earnings statements, especially the ones that have had subpar results.

Despite the “Chips Act” talk in the U.S., investors should pay attention to the earnings, guidance, and challenges firms are highlighting to choose a winning stock that will get through the deteriorating macro environment intact. 

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