Intel slumps as outlook suggests PC weakness may be in the works
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Intel (NASDAQ:INTC) shares went straight into the red, falling as much as 5% in Thursday's after-hours trading session, as the semiconductor giant gave a revenue outlook that fell shy of Wall Street analysts' estimates.
For its fiscal second-quarter, Intel (INTC) said it expects to report revenue of $18 billion, while analysts had previously forecast sales of $18.4 billion for the three-month period.
The chip sector has been dealing with an almost never-ending slate of international and industry-specific issues that have hampered the sector's growth. Slowdowns in component supply chains, Covid-19 related shutdowns in parts of China, where many semiconductors are made, and the ongoing uncertainty about Russia's ongoing war against Ukraine have all cast a cloud over the chip market over the past year.
Meanwhile, there have been concerns that PC sales could be slowing down after the pandemic spurred two years of widescale purchases from businesses and consumers as employees took up remote working on a worldwide scale.
Intel's (INTC) outlook wore down any enthusiasm investors may have had for the company's relatively positive first-quarter results.
For the quarter that ended April 2, Intel (INTC) said it earned 87 cents as a share, excluding one-time items, on $18.4 billion in revenue, compared to earnings of $1.34 a share, on $18.6 billion in sales in the same period a year ago. Intel's (INTC) analysts' consensus forecasts for a profit of 79 cents a share, or $18.3 billion in revenue.
Client computing, which includes chips made for PCs, remained the biggest source of sales for Intel (INTC) with sales of $9.3 billion. However, that figure was down by 13% from the first quarter of 2021. Data center sales continued to rise, and were up by 22% from a year ago, to $6 billion. 
Network and edge group sales of $2.2 billion rose 23%, while accelerated computing systems and graphics revenue of $219 million climbed 21% from a year ago. Revenue from Intel's foundry services more than doubled from a year ago, to reach $283 million.
Mobileye sales of $394 million edged up by 5%. Intel (INTC) is in the process of spinning of Mobileye as a standalone business in an IPO expected to take place before the end of the year.