(Reuters) – Intel shares fell more than 12% on Friday after a bearish forecast said the rise of ai was diverting business spending away from its traditional data center chips.
Shares have fallen about 30% so far this year as Intel (NASDAQ lags behind rival chip companies like Nvidia (NASDAQ in producing advanced artificial intelligence (ai) chips and components) .
Intel forecast second-quarter revenue of between $12.5 billion and $13.5 billion, compared with analysts' average estimate of $13.57 billion, according to LSEG data.
“While we believe they are doing everything they can to try to fix things, it is clear that the company is deeply broken and it will be years before the fruits of their (currently exhaustive) work are seen,” Bernstein analysts said in a statement. note.
Intel is planning to spend $100 billion in four US states to build and expand factories. It also introduced a new ai chip earlier this year to keep up with the competition.
Friday's drop would erase nearly $19 billion from the company's market value, which stood at $149.4 billion at Thursday's close.
Companies have prioritized spending on fast and advanced ai server chips, hurting demand for Intel's central processing units, which had long been the main chip powering data centers.
Although encouraged by the launch of Intel's Gaudi 3 ai chip, “we are concerned that the company will continue to cede share within the overall data center computing market to the likes of Nvidia and Arm,” Goldman Sachs analysts said.
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Still, Intel is optimistic that a new refresh cycle for personal computers around a new version of Microsoft's (NASDAQ:) Windows operating system will help PC sales in the second half of the year. That could translate into greater demand for the chips used in those devices.
The company's earnings contrasted with strong results from Microsoft and Alphabet (NASDAQ:), which are Nvidia customers and also design in-house chips for their data centers.
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