Intel Corporation (NASDAQ: INTC) stock price fell 10.34% during premarket trading after the chip manufacturer released its Q3 earnings report after the US markets closed on Thursday.
According to the report, Intel generated revenues worth $18.1 billion, lower than the average analyst expectation of $18.24 billion.
However, the chip manufacturer’s earnings per share came in at $1.71, beating analysts consensus estimates of $1.11.
Still, the drop in Intel’s share price today was driven by the company’s expectations of shrinking gross margins in future.
The semiconductor chip manufacturer revealed that it expects to generate revenues of $73.5 billion by the end of the year, with Earnings per share of $5.28.
Investors reacted negatively to the report after Intel revealed that it expects to net gross margins of 57% this year, but the figure would decline over the next two years before rising again.
George Davis, Intel’s Chief Financial Officer, said: “For gross margin, with the impact of our investment in capacity and the acceleration of our process technology, we expect gross margins between 51% and 53% over the next two to three years before moving upward,”
Davis made the above comments during a conference call with investors, where he also announced that he would be stepping down from his role in May 2022.
Intel noted that it was investing heavily in expanding and upgrading its manufacturing facilities to incorporate the latest chip manufacturing technologies, which would affect its overall margins.
Pat Gelsinger, Intel’s CEO, said: “We broke ground on new fabs, shared our accelerated path to regain process performance leadership, and unveiled our most dramatic architectural innovations in a decade.”
Intel revealed that its Q3 revenues from its client computing group fell 2% to $9.7 billion, driven by lower notebook sales amid an industry-wide chip shortage. However, the chip manufacturer reported strong growth for its desktop computer chips and its data centre chips business.
*This is not investment advice.
Intel stock price.
Intel stock price fell 10.34% premarket to trade at $50.21, falling from Thursday’s closing price of $56.00.
Should you invest in Intel stock?
If you’re a smart investor, you will know that having large-cap stocks in your portfolio is vital. They are more mature companies, considered safer investments, trade with less volatility, have greater analyst coverage, and in most cases, have a steady dividend stream. Due to the current market environment, we think now is the perfect time to add large-cap stocks to your portfolio. But which large-cap shares should you buy? Our stock analysts regularly review the market and share their picks for some of the best large-caps to invest in