Intel Analyst Flags 'Operational Missteps' After Earnings Shock

Intel’s latest earnings report has left investors scratching their heads, as the tech giant posted a shockingly low EPS of 2 cents and revenue of $12.83 billion.

This is among the recent disappointing performances, highlighting the ongoing struggles of the semiconductor giant.

Read Also: Intel Stock Falls After Weak Q2 Results, New Cost Reduction Plan, 15% Headcount Reduction

When Did Intel Last Hit These Lows?

Looking back at Intel’s earnings history, it’s clear that the company hasn’t seen such dismal figures in quite some time.

Chart Created By Author, Data Source: Benzinga Pro

The most recent shock came in the second quarter of 2023 when Intel reported earnings of negative 4 cents per share, marking a severe deviation from its financial targets. This negative EPS in April 2023 was the first time Intel dipped below zero in nearly a decade.

In terms of revenue, the $12.83 billion reported Thursday is the lowest since the first quarter of 2023, when Intel reported $11.7 billion.

The trajectory of Intel’s earnings have been far from steady, with notable highs and lows over the years. For instance, in the second quarter of 2022, Intel achieved revenue of $18.35 billion with earnings of 87 cents per share. In contrast, this recent report shows a steep decline, reflecting a trend that began to manifest more significantly from early 2023.

What’s Behind Intel’s Downturn?

JPMorgan analyst Harlan Sur expressed concerns about Intel’s “operational missteps” and muted demand in the second half of the year. The firm’s lowered price target from $35 to $26 underscores the seriousness of the situation. “Our UW thesis has been underpinned by a historical multi-year period of product/technology/operational mis-execution from 2015-2021,” the analyst said.

The report reveals significant gross margin issues, with only 38% in the second quarter of 2024, compounded by a transition of wafer production to Ireland. According to the analyst, these missteps have cast doubt on Intel’s ability to leverage its technological prowess into sustainable growth, especially as the semiconductor foundry market heats up.

Intel Stock Shows Significant Selling Pressure, Strongly Bearish Trend

Intel’s disappointing earnings performance reflects broader industry challenges, including market share losses and intensified competition. Trading at around $20-$21, the stock is down to 2015 levels and 58% lower year to date.

Chart created using Benzinga Pro

Intel’s stock is experiencing significant selling pressure, with the share price of $20.94 positioned significantly below several key moving averages, indicating a strongly bearish trend.

Specifically, the stock is trading below its five, 20 and 50-day exponential moving averages, signaling the risk of further bearish movement. The eight-day simple moving average (SMA) at $29.48, 20-day SMA at $32.24 and 50-day SMA at $31.34 all generate bearish signals. Moreover, the substantial gap between Intel’s price and its 200-day SMA of $38.57 further supports a bearish outlook.

These indicators collectively suggest that Intel may continue to face downward momentum unless a reversal in market conditions occurs.

The company’s strategic decisions and execution in the coming quarters will be crucial in determining whether it can reverse this downward trend or continue to struggle in an increasingly competitive landscape. Investors will be closely watching Intel’s efforts to cut costs and regain its footing in the tech world.

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