Intel Stock Plummets Amid Concerns Over Data Center Business and Market Share Loss
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On Thu, 25 Jul, 12:05 AM UTC
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Why Intel Stock Is Falling Today | The Motley Fool
While there isn't any fresh, business-specific news pulling Intel stock lower today, the semiconductor giant's valuation is falling on the heels of influential earnings releases from two members of the Magnificent Seven. Alphabet and Tesla both published quarterly results after the market closed yesterday, and investors found things in both reports that are spurring sell-offs across the tech sector. Alphabet delivered earnings per share (EPS) of $1.89 on sales of $84.74 billion in the second quarter, beating the average-analyst estimate's call for EPS of $1.85 on revenue of $84.29 billion. While the company's Q2 performance came in better than Wall Street had anticipated, the company's forward guidance suggested that the company's operating-income margin would be pressured due to increased tech-infrastructure spending and other factors. Meanwhile, Tesla posted mixed Q2 results and concerning forward guidance. The business recorded non-GAAP (adjusted) EPS of $0.52 on sales of $25.5 billion. Even though the company's revenue came in $760 million higher than Wall Street had anticipated, adjusted EPS missed the average-analyst target by $0.10. Cost cuts for its vehicles and investments in artificial intelligence (AI) technologies are dragging on the company's bottom line. Alphabet and Tesla's recent earnings reports don't provide much insight into Intel's upcoming business performance, but they could play a significant role in how the semiconductor company's stock trades in the near term. The Magnificent Seven have been very influential in powering gains for the broader market this year, and now it's proving time again. Apple, Microsoft, Amazon, and Meta Platforms, are scheduled to release their own respective earnings report at the end of July and on the first day of August. Intel is also scheduled to publish its own Q2 results after the market closes on Aug. 1. Wall Street found the company's last earnings report very disappointing, and investors will be looking for signs that the company is shoring up its core business and making advancements in the AI space. Then, Nvidia will publish its quarterly results on Aug. 28. The AI leader's performance and guidance will likely have big valuation impacts for the chip sector and market at large.
[2]
Why Intel Stock Is Falling Today
Intel (NASDAQ: INTC) stock is slipping in Wednesday's trading. The company's share price was down 2.8% as of 1:15 p.m. EDT, according to data from S&P Global Market Intelligence. While there isn't any fresh, business-specific news pulling Intel stock lower today, the semiconductor giant's valuation is falling on the heels of influential earnings releases from two members of the Magnificent Seven. Alphabet and Tesla both published quarterly results after the market closed yesterday, and investors found things in both reports that are spurring sell-offs across the tech sector. Alphabet and Tesla's earnings reports are dragging on Intel stock Alphabet delivered earnings per share (EPS) of $1.89 on sales of $84.74 billion in the second quarter, beating the average-analyst estimate's call for EPS of $1.85 on revenue of $84.29 billion. While the company's Q2 performance came in better than Wall Street had anticipated, the company's forward guidance suggested that the company's operating-income margin would be pressured due to increased tech-infrastructure spending and other factors. Meanwhile, Tesla posted mixed Q2 results and concerning forward guidance. The business recorded non-GAAP (adjusted) EPS of $0.52 on sales of $25.5 billion. Even though the company's revenue came in $760 million higher than Wall Street had anticipated, adjusted EPS missed the average-analyst target by $0.10. Cost cuts for its vehicles and investments in artificial intelligence (AI) technologies are dragging on the company's bottom line. What's next for Intel stock? Alphabet and Tesla's recent earnings reports don't provide much insight into Intel's upcoming business performance, but they could play a significant role in how the semiconductor company's stock trades in the near term. The Magnificent Seven have been very influential in powering gains for the broader market this year, and now it's proving time again. Apple, Microsoft, Amazon, and Meta Platforms, are scheduled to release their own respective earnings report at the end of July and on the first day of August. Intel is also scheduled to publish its own Q2 results after the market closes on Aug. 1. Wall Street found the company's last earnings report very disappointing, and investors will be looking for signs that the company is shoring up its core business and making advancements in the AI space. Then, Nvidia will publish its quarterly results on Aug. 28. The AI leader's performance and guidance will likely have big valuation impacts for the chip sector and market at large. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Intel wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $751,180!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Intel's stock price drops sharply following analyst downgrade and concerns about its data center business performance. The company faces challenges in maintaining market share against competitors like AMD.
Intel's Stock Takes a Hit
Intel Corporation (NASDAQ: INTC) experienced a significant drop in its stock price today, with shares falling by 5.3% as of 11:30 a.m. ET 1. This decline comes in the wake of a downgrade from Bernstein analyst Stacy Rasgon, who lowered the rating on Intel stock from "market perform" to "underperform" 2.
Analyst Downgrade and Concerns
Rasgon's downgrade was accompanied by a reduction in the price target for Intel shares from $42 to $30, citing concerns about the company's data center business 1. The analyst expressed skepticism about Intel's ability to maintain its market share in the face of increasing competition, particularly from Advanced Micro Devices (AMD) 2.
Data Center Business Challenges
Intel's data center segment has been a significant contributor to the company's revenue and profits. However, recent developments have raised doubts about its performance. Rasgon pointed out that Intel's data center business has been struggling, with the company potentially losing market share to competitors 1. This situation has led to worries about Intel's future growth prospects in this crucial market.
Market Share Erosion
One of the primary concerns highlighted by analysts is Intel's ongoing battle to maintain its market share. AMD, Intel's main rival in the semiconductor industry, has been making significant inroads into Intel's traditional strongholds 2. This increased competition has put pressure on Intel's pricing power and overall market position.
Impact on Financial Performance
The challenges facing Intel's data center business and the potential loss of market share are expected to have a substantial impact on the company's financial performance. Analysts are concerned that these factors could lead to lower revenue and reduced profitability for Intel in the coming quarters 1.
Investor Sentiment and Market Reaction
The downgrade and associated concerns have clearly affected investor sentiment towards Intel. The sharp drop in stock price reflects growing uncertainty about the company's ability to navigate the competitive landscape and maintain its leadership position in the semiconductor industry 2.
Looking Ahead
As Intel faces these challenges, investors and industry observers will be closely watching the company's strategic moves and financial results in the coming months. The ability of Intel to innovate, improve its product offerings, and effectively compete against rivals like AMD will be crucial in determining its future success and stock performance 12.
Reference
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