Why Intel Stock Is Plummeting Today


Intel (INTC -10.32%) stock is sinking in Friday’s trading. The semiconductor company’s share price was down 11.3% as of 10:30 a.m. ET, according to data from S&P Global Market Intelligence.

Intel published its fourth-quarter report after the market closed yesterday, and it actually delivered sales and earnings for the period that came in ahead of the market’s expectations. But the company issued forward guidance that spooked Wall Street, and the stock is getting hammered in today’s daily session.

With soft Q1 targets, Intel’s Q4 beats don’t mean much

In the fourth quarter, Intel posted non-GAAP (adjusted) earnings per share of $0.54 on revenue of $15.4 billion. Sales were up 10% year over year in the period, and earnings were up 260% compared to last year’s relatively weak profits. The performance came in significantly ahead of the average analyst estimate’s call for per-share earnings of $0.45 on sales of $15.15 billion, but the forward outlook for the business overshadowed last quarter’s sales and earnings beats.

For the first quarter, Intel is guiding for adjusted per-share earnings of $0.13 on revenue between $12.2 billion and $13.2 billion. Meanwhile, analysts had expected the company to post per-share earnings of $0.33 and revenue of $14.15 billion.

While the company often sees some quarterly cyclicality, the substantial drop off in sales and earnings is concerning. The shortfall in projected Q1 performance compared to what the market was expecting is significantly larger than its performance beats in Q4/ So, it’s unsurprising that investors are having an intensely negative reaction to the company’s recent report.

What comes next for Intel?

Even with today’s big sell-off, Intel stock is up roughly 48% over the last year. On the heels of the gains over the stretch, the company’s forward price-to-earnings multiple has been pushed up to roughly 23.

The company has posted big gains thanks to improving business performance on some fronts, government support for its foundry business, and excitement about opportunities in artificial intelligence, but investors may have to temper their expectations.

Intel’s guidance suggests the company is not yet seeing significant business tailwinds from artificial intelligence. While the company is still in the early stages of executing its artificial intelligence strategy, it’s notable that its business isn’t seeing much of a bump yet. The company’s guidance suggests that first-quarter sales will increase just 4% compared to the $11.7 billion in revenue it posted in Q1 2023.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.



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