Intel Q2 Preview: Expecting Continued Downward Trend

Intel is expected to face more challenges in Q2 FY25, despite outperforming the broader market since the last update. The company's performance is expected to be disappointing due to various factors, including weak demand for its products and intense competition in the semiconductor market. Despite this, Intel's stock has managed to hold its ground, but the author remains bearish on the stock and advises investors to maintain their "Underperform/Sell" stance.

Intel (INTC) is poised to report its Q2 FY25 earnings this week, with analysts expecting the company to face significant challenges despite recent market outperformance. The semiconductor giant has been outperforming the broader market since the last update, but its stock has remained relatively stable, reflecting investor concerns about its future prospects.

Intel's stock has been trading around $22 despite the broader semiconductor industry soaring, reflecting investor concerns about its future prospects. The company faces stiff competition, a struggling foundry business, and macroeconomic headwinds. While new AI products and cost-cutting efforts offer some hope, the negatives outweigh the positives, making INTC a risky bet [2].

Analysts are expecting Intel's revenue to decline 7.1% year on year to $11.93 billion, a deceleration from its flat revenue in the same quarter last year. Adjusted earnings are expected to come in at $0.01 per share [1]. The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Intel has missed Wall Street’s revenue estimates twice over the last two years.

Intel's peers in the semiconductors segment have shown mixed results. Penguin Solutions delivered year-on-year revenue growth of 7.9%, missing analysts’ expectations by 1.4%, while Micron reported revenues up 36.6%, topping estimates by 4.9%. Penguin Solutions traded up 10.6% following the results while Micron was down 1.2% [1].

The broader semiconductor industry is booming, driven by the explosive growth of artificial intelligence (AI). Taiwan Semiconductor Manufacturing Company (TSMC), a key player in AI chip production, reported a staggering 38.6% year-over-year revenue increase in Q2 2025, reaching $31.7 billion, with net income soaring 60.7% to $13.5 billion [2]. TSMC's strategic pivot towards AI and high-performance computing (HPC) chips has positioned it as a leader in the AI semiconductor revolution.

Intel's earnings report, slated for July 24, could influence the stock price. A better-than-expected performance might drive the stock higher, while a miss could push it lower. Analysts have collectively revised their estimates downwards by 8.3% over the last 30 days, reflecting a more bearish outlook [1]. Despite Intel's challenges, the broader semiconductor industry is booming, driven by the explosive growth of artificial intelligence (AI). Taiwan Semiconductor Manufacturing Company (TSMC), a key player in AI chip production, reported a staggering 38.6% year-over-year revenue increase in Q2 2025, reaching $31.7 billion, with net income soaring 60.7% to $13.5 billion [2].

Intel faces stiff competition, a struggling foundry business, and macroeconomic headwinds. While new AI products and cost-cutting efforts offer some hope, the negatives outweigh the positives, making INTC a risky bet. The company's stock has been trading around $22 despite the broader semiconductor industry soaring, reflecting investor concerns about its future prospects.

References:
[1] https://www.tradingview.com/news/stockstory:06c193668094b:0-intel-intc-q2-earnings-what-to-expect/
[2] https://www.ainvest.com/news/intel-stock-struggles-competition-macro-headwinds-2507/