Intel stock falls 5% as forecast disappoints, chipmaker warns of margin pressure

Core Viewpoint - Intel Corp. shares declined by up to 5% in after-hours trading following a first-quarter outlook that fell short of Wall Street expectations, dampening optimism regarding its turnaround efforts [1] Financial Performance - Intel forecasted first-quarter revenue of approximately $12.2 billion, below the average estimate of $12.6 billion [1] - The company expects to break even on an earnings-per-share basis, contrasting with analysts' projections of $0.08 [1] - In the fourth quarter, Intel reported earnings of $0.15 per share, surpassing last year's $0.13 and the expected $0.09 [3] - Revenue for the fourth quarter was $13.7 billion, a 4% decline from the previous year but above forecasts of $13.4 billion [3] Market Dynamics - The cautious outlook follows a better-than-expected fourth quarter, highlighting the challenges Intel faces in balancing short-term cost pressures with long-term investments in artificial intelligence and advanced manufacturing [2] - Demand for CPUs, particularly in data centers for AI workloads, is rising, as noted by CEO Lip-Bu Tan [3][4] - Intel's adjusted gross margin was 37.9%, down from 42.1% a year ago but better than estimates [4] Competitive Landscape - Intel remains the only large-scale US producer of leading-edge chips, supported by the federal government, positioning it against Asian manufacturing rivals [6] - The company faces intense competition from Advanced Micro Devices and Arm-based designs, while Nvidia leads in AI accelerators [6] Investor Sentiment - Wall Street sentiment towards Intel has improved recently due to stronger demand for traditional CPUs and excitement around upcoming Panther Lake chips for AI-powered PCs [7] - Despite a nearly 12% increase in shares this month, the momentum is now under scrutiny due to rising costs for memory and storage components, which could impact demand for Intel-based servers and PCs [8]