- Intel’s stock fell as much as 10% on Friday on a weak outlook that factored in the impact of tariffs.
- The company expects tariffs to add costs amid growing odds of a recession.
- Its estimate-beating results were boosted by consumers looking to get ahead of the trade war, it said.
The move: Intel shares fell as much as 10% Friday, hitting an intraday low of $19.34 per share. The slump shortly after the open erases the stock’s year-to-date gain.
Why: Investors dumped shares on Friday despite better-than-expected first-quarter earnings.
While the firm notched adjusted earnings-per-share of $0.13, beating consensus expectations, it failed to break a streak of quarterly losses, logging an $821 million income decline.
Guidance was more discouraging. For the second quarter, Intel expects $11.2 billion to $12.4 billion in revenue, short of projections of $12.8 billion.
“The very fluid trade policies in the US and beyond, as well as regulatory risks, have increased the chance of an economic slowdown, with the probability of a recession growing,” David Zinsner, Intel’s chief financial officer, said in the earnings call.
What it means: In other words, Intel is sharing in the macroeconomic jitters that many companies have expressed in the early days of Trump's trade war.
"While we have offsets including a global, highly diversified manufacturing footprint to help mitigate tariffs, we will certainly see costs increase and we feel it prudent to anticipate a TAM contraction," he added.
The firm's first-quarter outperformance could be justified by a consumer rush to buy Intel's products ahead of tariff disruptions, he added.
All in all, this uncertainty is a bleak outlook for a company already in a bind. On Thursday, the chipmaker's new CEO, Lip-Bu Tan, issued a memo to redirect the company back from the brink: plans include layoffs and a stricter return-to-office mandate.
Over recent years, the semiconductor designer has fallen behind on the artificial intelligence race, and has had to navigate an era of layoffs and buyouts.