Why did the U.S. chip giant plummet nearly 14% overnight?

Reasons include: 1. Quarterly financial report was lower than expected; 2. Declining profit margin; 3. Weak demand for personal computers; 4. Slowing data center growth; 5. Intensified competition; 6. Impact of macroeconomic factors.

The U.S. chip giant plunged nearly 14% overnight and the reasons are explored

The U.S. chip giant Intel (INTC) stock price dropped at 7 It plummeted 13.86% in late trading on March 29, the largest single-day drop in recent years. The main reasons for this plunge are as follows:

1. Second quarter financial report was lower than expected:

• Intel announced its second quarter of fiscal 2023 Net income was $5.3 billion, well below analysts' expectations of $6.22 billion.
• Revenue was $15.3 billion, down about 22% from a year earlier and below expectations of $15.8 billion.

2. Margin decline:

• Intel's gross profit margin fell to 47.3% from 58.6% last year.
• Net profit margin also fell sharply due to rising chip production costs and a weak personal computer market.

3. Weak PC demand:

• Global demand for PCs is weakening due to economic uncertainty.
• Intel relies heavily on PC chip sales, so the drop in demand has had a significant impact on the company's finances.

4. Data center growth slows:

• Intel’s data center business has been a key driver of growth over the past few quarters.
• However, data center revenue growth slowed during the quarter as customers postponed spending.

5. Increasing competition:

• Intel faces stiff competition from the likes of AMD and Arm.
• These competitors are launching more competitive products and eating into Intel's market share.

6. Macroeconomic factors:

• Continued inflation, supply chain disruptions and the Russia-Ukraine conflict have negatively impacted the technology industry.
• These macroeconomic factors have weakened consumer spending and caused businesses to delay investment.

The plunge in Intel’s stock price reflects the multiple challenges facing the company. The company is grappling with falling demand, rising costs and fierce competition. Investors are concerned about whether Intel can overcome these challenges and return to profitable growth.

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