On Friday, Intel stock had its worst day since 1974 - after an absolute disasterclass of an earnings report
As much as I’ve waxes lyrical on Micron’s last 2 earnings being the best I’ve ever seen, Intel’s performance this quarter was one of the worst.
Seriously… how are you not making money in the biggest computer boom is all time?!?!?
And yeah, some of you will see Friday as a buying opportunity… but I’d stay well away from an Intel dip.
First, they’re forecasting earnings 40% lower than expected…
When every other chipmaker is exceeding even the loftiest of expectations…
And gross margins are heading in the wrong direction…
And the biggest part of the business is shrinking. PC chips brought in $8.1 billion last quarter, more than any other division.
Intel expects that figure to fall by more than a fifth next quarter, and its CFO says the PC slowdown will continue “at least through the first half of next year.”
Then there’s the biggest joke of all… Intel’s foundry business…
After trying and failing to match TSMC for more than a decade, Intel tried to kickstart their factory division again last year…
And they booked $6.1 billion in revenue last quarter… which doesn’t sound too bad right?
Except… 94% of that revenue… WAS FROM INTEL THEMSELVES
Yes it’s true, only $411 million of that $6.7 billion came from outside customers.
And they still managed to lose $1.9 billion on that $6.1 figure…
Intel’s answer is to spend more of course… because this factory gamble will surely work…
So they’ve earmarked another $20 billion in factory spending this year… with more next year - with no indication of postive ROI anytime soon…
Even after Friday, the shares trades at roughly 30 times what analysts expected Intel to earn in 2027, before those forecasts started getting cut.
This one is not for me…
Oliver