What happened
Shares of Intel (NASDAQ: INTC) were down as low as 2.4% after the market open on Thursday. However, the stock has since recovered most of those gains and is down just 0.23% as of 10:48 a.m. ET.
The stock dipped after management delivered remarks about near-term demand trends at an investor conference on Wednesday. On that note, Samsung Electronics also issued a dire warning that chip demand may not improve much even in 2023.
Intel's stock price has been in a downward spiral all year. Year to date, the shares are down 41%, with most of those losses coming in just the last few months. Could the stock rebound off these lows? Management hinted that demand could stabilize in the fourth quarter.
So what
Intel entered 2022 with optimism that the demand it saw in 2021 would continue. But demand for consumer PCs has collapsed with weakness accelerating through the second quarter.
Some of the softness has also started to filter into the enterprise market. Intel reported a 17% year-over-year decline in non-GAAP (adjusted) revenue in the second quarter, with the datacenter and artificial intelligence group posting a 16% decline.
Now what
At the Evercore TMT conference on Wednesday, Intel CEO Pat Gelsinger said that chip demand has been worse than originally expected. Intel's third-quarter guidance had called for revenue to land in a range of $15 billion to $16 billion compared to $17.3 billion in the third quarter of 2021. Gelsinger warned investors at the conference that revenue is trending at the lower end of that range so far in the quarter. "It's pretty rough out there," he said.
On the bright side, Gelsinger said the company is currently shipping less volume than demand in the market, which means inventory channels are going to become light very soon and need replenishment. That should lend to better growth starting in the fourth quarter, Gelsinger noted.
It's still difficult to call the stock a genuine bargain when Intel is still facing market share losses against Advanced Micro Devices.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
