Intel shares plummet 28% after dismal financial report

Analysts did not initially expect any pleasant surprises from Intel’s quarterly report, but the company’s own forecasts for revenue and profit margins for the current quarter turned out to be obviously worse than market expectations, as a result of which, after the opening of trading in the United States, the company’s stock quotes immediately plummeted by 28%, holding on slightly for level of about minus 25% before opening.

Image Source: Intel

The proximity of Intel’s goal of mastering five new technological processes in four years did not impress investors, and the current cost structure, including the cost of processors of the new Lunar Lake and Arrow Lake families, added pessimism to investors. The company is forced to cut costs literally in all areas and will be forced to save on capital expenditures, which were one of the main conditions for the potential transformation of the processor giant’s business. In addition, Intel will refuse to pay dividends for some time, and this also cannot please shareholders in the context of their continuing negative dynamics for many years. In fact, Intel shares are down more than 40% in five years, and they’ve depreciated by about the same amount since the beginning of this year.

Pressure on Intel’s profit margin will continue until the end of 2025 at best, as Raymond James analysts note, and there are no factors for a rapid increase in revenue over the same horizon. Against this background, even the upcoming reduction in Intel’s workforce by 15% could not provide support for the company’s stock price, although such news often contributes to this.

Nvidia shares also fell at first by 4.5% in evening trading in the US, but later recovered a small part of the losses. Since they have been dynamically growing in price over the past year and a half, investors are countering any potential risks for the semiconductor segment as a whole by taking profits, which causes a correction in the stock price of this issuer. In the case of Nvidia, the negativity was also added by rumors about an antitrust investigation allegedly launched by the US Department of Justice into Nvidia’s behavior in the market for computing accelerators for artificial intelligence systems.

In Asia, trading in TSMC shares began with a decline of 4.6%, while Samsung securities lost more than 4% in price. The former is the largest contract chip manufacturer, whose clients include Intel, AMD, Apple and Nvidia, while the latter remains the largest manufacturer of memory chips, although it is inferior to rival SK hynix in the popular HBM segment. The latter’s shares fell in price by more than 10%.

Shares of European technology companies also fell in price today, the trend affecting ASML, STMicroelectronics and Infineon. Market quarterly reports released this week made it clear that not all are benefiting equally from the artificial intelligence boom.