The Intel (INTC) stock price is in the spotlight after the firm delivered its first-quarter results. On Thursday, the stock declined by more than 1.77% and closed at $62.57. The sell-off continued in extended hours, as the stock fell by an additional 2%.
Intel quarterly earnings
Intel has been in the spotlight in the past few years. Year-to-date, the stock has surged by more than 40%, becoming the best-performing company in the Dow Jones. This performance happened as the ongoing chip shortage led many to believe that the company was positioned to capture a larger market share. Also, investors believe that the company’s turnaround strategy will work.
On Thursday, Intel published mixed earnings. Its revenue declined by 0.7% year-on-year to $19.7 billion. This performance was $1.75 billion more than what analysts were expecting. Its non-GAAP EPS came in at $1.39, better than the expected $1.14. Most importantly, the company raised its full-year guidance. It expects to make more than $77 billion in revenue.
By segment, the Client Computing Group revenue jumped from $9.8 billion in the first quarter of 2020 to $10.6 billion this year. This was due to record notebook, WIFI, and thunderbolt revenues. The Data Centre Group revenue fell from $7 billion in 2020 to $5.6 billion because of the impacts associated with the pandemic. The other business segment revenue also increased slightly.
Intel faces a tough path
Intel, once a highly regarded innovator in the semiconductor industry, has recently become an underdog. The company has seen its market share in the Central Processing Unit (CPU), and Graphical Processing Unit (GPU) has continued to decline.
This is partly because the company has struggled to manufacture its 7nm chips. It now expects to launch these chips in 2023. This will be a few years after Advanced Micro Processor (AMD) launched its 7nm chips that have continued being popular. Its GPU business has also struggled as more consumers have shifted towards products manufactured by Nvidia (NVDA).
These problems have forced more companies to start manufacturing their own chips. Microsoft and Amazon are now manufacturing their data center chips while relying slightly on those manufactured by Intel. Apple, too, has started developing its own M1 chips as it moves away from Intel. This week, the company launched new Macs with the M1 technology. For the first time ever, the Macs are extremely thin because of the M1 chips.
Intel stock price has also struggled over the years because of the baggage brought by the company’s foundry business. Many analysts believe that the company should spin it off into a separate company. However, this may not happen as the company is planning to invest $20 billion into two plants in the US.
Analysts have mixed feelings about Intel. Those at Bank of America are critical of the firm because of its foundry business, while those at Credit Suisse and JP Morgan have raised their target to $80.
Intel stock price forecast
The four-hour chart shows that the Intel stock price has been under pressure lately. It has fallen by more than 10% from its highest level this year. Also, it has moved below the lower line of the ascending triangle pattern while the 25-day and 50-day moving averages are doing a bearish crossover. The MACD has continued to make a bearish divergence pattern. Therefore, the INTC stock price will likely continue dropping as bears target the next key support at $55, which is about 12% below the current levels.