Intel Corp's market valuation decreased by USD 8 billion, after they projected a very large decline in revenue.
Intel is predicting a staggering loss for the first quarter of this year and a drop in revenue of USD 3 billion, which comes as growth in the data center business is slowing.
Following the announcement, Intel shares slumped 6.4%, while rivals AMD and Nvidia fell only 0.3% and 2.8%. Another company affected by the decline was KLA Corp, which supplies components to Intel, whose shares fell 6.9%.
"There are no words to describe or explain Intel's historic collapse," said Hans Mosesmann, an analyst at Rosenblatt Securities, one of 21 analysts who immediately cut Intel's target price.
This is in contrast to Intel CEO Pat Gelsinger's target of trying to restore Intel's glory by expanding assembly contracts and building new factories in the United States and Europe.
But lately, Intel has often lost to AMD in terms of market share, because AMD uses the services of TSMC to manufacture its chips, and TSMC has a very dominant advantage in terms of chip manufacturing technology compared to Intel.
"AMD's Genoa and Bergamo (data center) chips have performance and price advantages over Intel's Sapphire Rapids processors, which will push AMD's lead even further," said Matt Wegner, analyst at YipitData.
Intel alone plans to cut production costs by USD 3 billion by 2023, generate USD 7.7 billion from operations in Q4 and pay dividends of USD 1.5 billion. With capital expenditure (capex) of around USD 20 billion in 2023, analysts estimate that Intel will have to reduce its dividend even more.