Intel Corp.’s first-quarter outlook, which called for break-even adjusted profits per share while analysts were anticipating 9 cents, was a huge miss. Other metrics of guidance also failed.
In light of this, Intel’s stock (INTC) isn’t responding all that well, down roughly 1% on Friday morning after opening marginally higher. What’s causing it to react so negatively? Maybe it’s just exhaustion.
In a note to clients, Bernstein analyst Stacy Rasgon stated, “At this point, bad results from Intel no longer burn the way they used to as investors are likely growing numb to the company’s travails.” Investors have grown accustomed to revenue and margin challenges, as seen by Intel’s stock falling 60% since the beginning of 2024.
Read: Despite yet another drop in income, Intel shows indications of growth
Rasgon also thought up additional theories. Perhaps there’s “a view that things are getting so bad that something has to happen, which in our mind is really the only reason anyone would want to be here,” he stated. In order to maximize shareholder value, some investors have hoped that Intel will take a bold step, such as selling off a portion of the corporation or completely merging with another business.
Intel is currently playing a waiting game as well. After a difficult tenure, Pat Gelsinger stepped down as CEO in December, leaving Intel with two acting CEOs. During the earnings call, management stated that while there was “nothing new to report,” the search for a permanent CEO is “progressing.”
In a state of uncertainty, Rasgon said “beats or misses on their business fundamentals likely take a back seat for now to the impending CEO transition (if we get one) and what they and the board might choose or not choose to do with the company.”
Srini Pajjuri, an analyst at Raymond James, suggested that Intel’s view might be too cautious.
“Management attributed the weaker outlook to tariff-related pull-ins, PC inventory balancing, and competition,” he stated. “Conservatism also appears to be playing a role as the company looks to set a more reasonable expectation post the recent CEO departure.”
The prediction was likewise viewed as cautious by William Stein of Truist Securities, who and his colleagues “recognize the argument that says expectations have been reset.”
However, acknowledging the argument is not the same as accepting it. “Unfortunately, the view into the business is so opaque, we just can’t make that call,” he said.
36 analysts with hold-equivalent ratings are among the 46 analysts FactSet tracks that follow Intel’s stock. Rasgon, Pajjuri, and Stein all belong to that group.
