Just a week after Intel published its disastrous quarterly report, its Moody’s credit rating was downgraded one notch to BAA1, and it took S&P a little longer to take similar action against the borrower. Intel’s solvency is now considered only satisfactory by S&P representatives.
Image Source: Intel
As Seeking Alpha explains, the downgrade of Intel’s credit rating by S&P from A- by one notch to BBB+ was caused by a reassessment of both the results of the previous half of the year and the prospects for the next two or three years. In the last half of the year, as S&P representatives note, Intel performed worse than expected in all key business areas, including client, server and AI, telecommunications and edge computing. Intel’s corporate clients, as experts note, are focused on the artificial intelligence segment, while other Intel divisions receive less funds than planned.
Moreover, S&P believes that Intel’s revenue will also not reach its planned level in the next two or three years. First, customers will save money. Secondly, the competitive environment will be tense in all market segments in which Intel is represented with its products. Demand for Intel products in the server components and AI segment will also be lower than expected in the current half of the year, S&P representatives added. In the server CPU segment, Intel faces growing competition from AMD.