Intel stock drops 14% as manufacturing troubles overshadow earnings beat

Intel's shares experienced a significant decline of 14% on Friday, driven by the company's lackluster guidance and warnings of impending supply shortages. During a fourth-quarter earnings call on Thursday, CEO Lip-Bu Tan expressed concerns about the company's ability to meet the full demand for its products, noting that production efficiency, or yield, has fallen short of expectations. "We are on a multiyear journey," Tan stated. "It will take time and resolve." For the first quarter, Intel forecasts revenue to fall between $11.7 billion and $12.7 billion, alongside adjusted earnings per share expected to break even. These projections fall short of the market consensus, which anticipated earnings of 5 cents per share and revenue of $12.51 billion. Over the past year, Intel shares had more than doubled, fueled by optimistic projections for a turnaround following substantial investments from the U.S. government, SoftBank, and Nvidia. Intel's foundry business, responsible for manufacturing chips for other companies, has struggled to compete against rivals that are capitalizing on the booming demand for data center artificial intelligence technologies. Investors were eager for insights into the company's foundry customer base, which could potentially drive future stock momentum. CFO David Zinsner indicated that Intel expects to welcome customers for its advanced 14A technology in the latter half of the year. However, analysts from RBC Capital Markets cautioned that significant revenue contributions from these customers might not be realized until late 2028. While acknowledging the recent buzz surrounding Intel's prospects, analysts from Jefferies expressed skepticism about the company's future, citing ongoing market share losses, an unclear AI strategy, and uncertain opportunities in fabrication and packaging. Despite the challenges ahead, Intel managed to exceed Wall Street's expectations for both earnings and revenue in the fourth quarter.