Source: Wall Street See
Author: Zhang Yaqi.
Some analysts believe that if Intel cannot come up with a cohesive sales and marketing strategy for its latest two products, they may not have much time left.
This week, former chip giant Intel has become the focus of Wall Street's attention - but not in the way it wants.
After Q2's earnings report, the company's stock price plunged 26% to $21.48 in a single day, almost the worst decline in 50 years, second only to the 31% drop in July 1974. The company's stock price has fallen 42% this year, causing a sharp sell-off that dragged down the Nasdaq index by 2.4% and dragged down global semiconductor stocks.
The company's current market capitalization has fallen below $100 billion to $96.7 billion.
The financial report was hit hard, and executives admitted to misjudgment.
This week, bad news for Intel has come one after another. This includes massive layoffs of 15,000 people, the first suspension of dividends in 32 years, and disappointing financial performance announced on Thursday.
The most surprising thing is their performance guidance. Intel said it expects revenue of $12.83 billion this quarter, far below the expected $14.4 billion. Revenue fell 8% compared to the same period last year.
Intel's outlook for the third quarter is even worse, with revenues expected to be $12.5-13.5 billion, down $1.2 billion from the same period last year. Profit margins are also weak, expected to be 38%, down nearly 8 percentage points year-on-year.
Analysts believe that Intel's main problem is failing to keep up with product development. In particular, the data center business, with revenue of $3.05 billion, fell 3% year-on-year, compared to analysts' expectations of $3.07 billion.
By contrast, Intel's strongest competitor AMD has taken most of the market share from it, with revenue growth of more than double in the data center department. New Street Research estimates that by the end of the year, AMD's market share of x86 server processor business will reach 40%, compared to less than 5% four years ago.
Intel CEO Pat Gelsinger admitted in a conference call with analysts that the decision to produce Core Ultra PC chips that can handle AI workloads faster was a contributing factor to the company's losses.
Other company executives admitted that they had misjudged the company's sales and technological improvement speed.
"We were too optimistic about revenue," CFO David Zinsner said. "We should have a deeper understanding of business development in this year."
What can Intel rely on to turn things around?
Facing the increasingly fierce competition for market share, does Intel still have a chance to turn things around?
Some analysts believe that it needs two products to be successful in the next 12 months: Lunar/Panther Lake and Gaudi 3.
Lunar Lake and Panther Lake are key products for the client business, accelerating AI performance and significantly improving the graphics performance of consumer and commercial notebooks. Panther Lake is expected to be released in the second half of 2025, with company executives saying it will be a processor that is "better in performance and energy efficiency than AMD products".
Analysts say Intel needs these products not only to maintain its customer base, but also to motivate and attract them to buy new products at higher prices to improve profit margins and better compete with rivals such as AMD and Qualcomm.
At the same time, Gaudi 3 is the third-generation product of Intel's Habana AI accelerator series and its last hope in the data center AI ecosystem revolution.
Market Watch columnist Ryan Shrout believes that Intel's Gaudi product line has technical strength and potential to make waves. Its price advantage and multiple architectural features make it stand out from standard GPU accelerators.
But if Intel's leadership cannot formulate a cohesive sales and marketing strategy for the latest two products, it may not have much time left.
Editor/Jeffy