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Intel Tanks as Revenue Falls Short, Guides for Lower Margins

Intel Tanks as Revenue Falls Short, Guides for Lower Margins

22 Oct 2021

Intel (NASDAQ:INTC) is trading up 1.14% at 56.00

Intel stock (NASDAQ:INTC) plunged 10% in Friday’s premarket trading as third-quarter revenue fell short of its own guidance and the chipmaker predicted lower margins in the years ahead.

Lower revenue from the key segment of datacentre chips weighed especially on the results, as the company appeared to fall further behind the likes of Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD). Third-quarter revenue from the segment fell 10% to $6.5 billion. In comments to Reuters, CEO Pat Gelsinger attributed this to new rules in China that hurt orders from Cloud vendors there.

Gelsinger told Reuters the company has resolved shortages facing its own internal manufacturing operations, but those lack of supplies of other products such as power management chips and WiFi chips were stopping its customers from shipping PCs and servers. That in turn ate into their demand for Intel’s.

In a conference call with investors, Intel said gross profit margins are likely to be between 51% and 53% over the next two to three years. It sees adjusted gross margins of 53.5% in the ongoing quarter, lower sequentially as well as year-on-year basis. It was 57.8% in the quarter ended September 25.

According to Reuters, Intel is working on introducing several new generations of chipmaking-technology by 2025. Technologies tend to be less efficient early on and become more profitable as chipmakers finetune their processes.

On technical fronts Intel (NASDAQ:INTC) RSI stood at 65.67 and currently stock is trading above all MA. So, BUY position can be taken with following target and stoploss:

TRADE SIGNAL – : Intel (NASDAQ:INTC) – BUY : 56.02, TARGET: 56.58, STOP LOSS : 55.52