Why was Intel stock falling today?

shares Intel Corporation (you are K -9.20%) Shares of the semiconductor company fell on Friday after the semiconductor giant offered a disappointing forecast for the second quarter, underscoring fears that it is still missing the artificial intelligence boom.

As a result, the stock was down 9.7% as of 1:47 PM ET.

Intel beat estimates, but Q2 looks weak

For the first quarter, Intel reported a 9% increase in revenue to $12.7 billion, far exceeding estimates of $11.9 billion. Revenue growth rebounded in its PC-focused client computing group, rising 31% to $7.5 billion, despite weakness in the data center and artificial intelligence segment, where revenue rose just 5% to $3 billion.

This is partly due to easy comparisons to last year’s sluggish quarter, where gross margin rose 6.8 percentage points to 41%. The company also reversed an operating loss compared to last year, and ended the quarter with adjusted earnings per share of $0.18, which beat expectations at $0.13.

“We are making steady progress against our priorities and had a strong quarter,” said CEO Pat Gelsinger, adding: “We are confident in our plans to drive sequential growth throughout the year as we accelerate our AI solutions and maintain our continued focus on execution.” Operational discipline and shareholder value in a dynamic market.”

Profits are still elusive

Investors who had hoped the launch of the Gaudi 3 AI GPU would improve profitability were clearly disappointed with the second-quarter guidance.

Intel expects revenue to be between $12.5 billion and $13.5 billion in the current quarter, which represents flat growth at the midpoint, but was better than the consensus of $12.7 billion.

On the bottom line, Intel sees adjusted earnings of just $0.10, down from $0.25 in the year-ago quarter and well below the consensus of $0.24. It also expects a GAAP loss in the quarter.

Intel has been vocal about its AI prospects and its foundry services, but until the company can show it is implementing and delivering meaningful improvements to the bottom line, the stock will likely struggle. At this point, it seems best to avoid Intel stock.