On Friday 27 January 2023 Intel lost about $8 billion of its market value after the US chipmaker shocked Wall Street with a weak outlook, fanning fears of a deep slump in the PC market. Intel had reported fourth-quarter 2022 revenue of $14.0 billion, down 32% year on year, and forecast a surprise loss for the first quarter of 2023 with revenue of $10.5 to $11.5 billion, about $3 billion below analyst estimates. The shares closed 6.4% lower. This post was first written on 27 January 2023.
Intel's results and filings are on its investor site: https://www.intc.com/financial-info/financial-results
Key takeaways
- Intel's Q4 2022 revenue fell 32% to $14.0 billion, and the company posted a GAAP net loss for the quarter.
- Its Q1 2023 revenue guide of $10.5 to $11.5 billion was about $3 billion below Wall Street estimates, with a loss expected.
- The shares fell 6.4% on 27 January, erasing roughly $8 billion of market value, while AMD and Nvidia rose.
- Twenty-one analysts cut their price targets. Rosenblatt's Hans Mosesmann called it a "historic collapse".
- The weak outlook added pressure on CEO Pat Gelsinger's plan to rebuild Intel's lead through contract manufacturing and new fabs in the US and Europe.
The numbers
| Measure | Figure (as reported) |
|---|---|
| Q4 2022 revenue | $14.0 billion, down 32% year on year |
| Q4 2022 GAAP net result | Loss of about $0.7 billion |
| Q1 2023 revenue guide | $10.5 to $11.5 billion |
| Analyst Q1 2023 estimate at the time | About $13.9 billion |
| Share move on 27 January 2023 | Down 6.4% at the close |
| Market value erased | About $8 billion |
A quick check on the headline figure: Intel's market value before the drop was roughly $125 billion, and 6.4% of that is about $8 billion. That is a large one-day move, but smaller than the intraday low, when the shares were down close to 10%.
What Reuters reported
According to Reuters, the company predicted a surprise loss for the first quarter, and its revenue forecast was $3 billion below estimates, as it also struggled with slowing growth in the data centre business. Intel shares closed 6.4% lower, while rival Advanced Micro Devices and Nvidia ended the session up 0.3% and 2.8% respectively. Intel supplier KLA Corp settled 6.9% lower after its own weak forecast.
"No words can portray or explain the historic collapse of Intel," said Rosenblatt Securities' Hans Mosesmann, who was among the 21 analysts to cut their price targets on the stock. The poor outlook underscored the challenges facing Chief Executive Pat Gelsinger as he tried to re-establish Intel's dominance by expanding contract manufacturing and building new factories in the United States and Europe.
"AMD's Genoa and Bergamo (data center) chips have a strong price-performance advantage compared to Intel's Sapphire Rapids processors, which should drive further AMD share gains," said Matt Wegner, analyst at YipitData.
Analysts said that put Intel at a disadvantage even when the data centre market bottomed out, which the Reuters report put in the second half of the year, as the company would have lost even more share by then. "It is now clear why Intel needs to cut so much cost as the company's original plans prove to be fantasy," brokerage Bernstein said. "The magnitude of the deterioration is stunning, and brings potential concern to the company's cash position over time."
Why it happened
A PC market in decline
PC demand had boomed during the pandemic and then fell sharply. IDC counted 2022 traditional PC shipments down 16.5% and fourth-quarter shipments down 28%. PC makers were also working through excess inventory, so they bought fewer processors than end demand alone would suggest.
Competition in the data centre
Intel's Sapphire Rapids Xeon processors had launched in January 2023 after long delays, while AMD's 4th Gen EPYC "Genoa" had shipped in November 2022. Analysts expected AMD to keep gaining server share.
Heavy spending on manufacturing
At the same time, Intel was spending heavily on new fabs under its IDM 2.0 plan. Falling revenue and high capital spending squeezed margins and cash, which is why Bernstein focused on costs and cash. Intel had already announced cost cuts of $3 billion in 2023, rising to $8 to $10 billion a year by the end of 2025.
What happened next
For readers coming to this later: Intel reported Q1 2023 revenue of about $11.7 billion, within its guided range, and a net loss. The company continued its cost-cutting through 2024. Gelsinger retired in December 2024, and Lip-Bu Tan became CEO in March 2025.
Frequently asked questions
Why did Intel stock fall in January 2023?
Because its first-quarter 2023 outlook was far below expectations and included a loss, on top of a 32% fall in Q4 2022 revenue.
Who called it a "historic collapse"?
Hans Mosesmann, an analyst at Rosenblatt Securities, quoted by Reuters.
How did AMD and Nvidia shares react?
Both rose that day, by 0.3% and 2.8% respectively, according to Reuters.
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