Intel shares plunge on earnings expectations
A smartphone with an Intel logo displayed is placed on a computer motherboard in this illustration created on Mar 6, 2023. (File photo: REUTERS/Dado Ruvic)
SAN FRANCISCO: Intel shares dove more than 10 per cent Thursday (Jan 22) despite the struggling US chip maker doing better than expected in the recently ended quarter, as its revenue forecast disappointed investors.
Intel reported a loss of US$600 million on revenue of US$13.7 billion in the final three months of last year.
That compares with a loss of US$100 million on revenue of US$14.3 billion in the same period a year earlier.
While the depth of losses beat market expectations, Intel's revenue forecast for the current quarter fell far short of what Wall Street analysts were predicting amid recently raised expectations for the company.
Shares in Intel soared late last year after AI giant Nvidia announced it would invest US$5 billion in its lagging rival.
Nvidia joined Japanese investment giant SoftBank and the US government in backing the once-dominant chipmaker, which has fallen behind in recent years after missing key technology shifts.
President Donald Trump's administration surprised the tech industry last year by taking a 10 per cent equity stake in Intel, recognising the strategic importance of the company that powered the PC and internet revolution with its processors.
Intel largely missed the smartphone boom and failed to develop competitive hardware for the AI era, allowing Asian manufacturers TSMC and Samsung to dominate the custom semiconductor market.
Most notably, Intel was blindsided by Nvidia's rise as the world's leading AI chip provider.
Nvidia's graphics processing units (GPUs), originally designed for gaming consoles, have become the essential building blocks of artificial intelligence systems, with tech giants scrambling to secure them for their data servers and AI projects.
Lip-Bu Tan, who took over as Intel CEO in March of last year amid layoffs and market challenges, has acknowledged the difficulty of turning the company around, particularly as US-China trade tensions complicate the semiconductor landscape.
