What Happened?
Shares of computer processor maker Intel (NASDAQ: INTC) fell 9.6% in the afternoon session after the company reported an unexpected second-quarter loss and announced significant restructuring plans, including major job cuts. While the chipmaker’s revenue of roughly $12.8 billion beat forecasts, it posted an adjusted loss of $0.10 per share, which missed Wall Street's expectations for a small profit. In response to the results, Intel announced major cost-cutting measures, including plans that involved a 15% reduction of its global workforce and the cancellation of chip factory projects in Germany and Poland. New CEO Lip-Bu Tan stated the company had "invested too much, too soon—without adequate demand."
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What Is The Market Telling Us
Intel’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 3.2% on the news that Stifel raised its price target on the company, adding to investor optimism ahead of its quarterly earnings report this week. Stifel lifted its price target on Intel to $24.50 from $21.00, while maintaining a "Hold" rating on the shares. The move comes as investors and analysts keenly await the company's second-quarter results. According to the analyst note, investor focus will likely be on the company's long-term strategy, including updates on its advanced 18A and 14A chip production processes and efforts to restructure its portfolio.
Intel is up 1.8% since the beginning of the year, but at $20.58 per share, it is still trading 34.4% below its 52-week high of $31.35 from July 2024. Investors who bought $1,000 worth of Intel’s shares 5 years ago would now be looking at an investment worth $415.17.
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