So much for the famous second half comeback. The two major computer chip makers are now acknowledging that PC demand is weakening beyond their already negative outlook.
On Monday, Bernstein analyst Stacy Rasgon issued a report after meeting with senior executives at
sophisticated micro devices
) Last week. The bottom line is that the PC market is “getting worse”.
AMD and Intel use the x86 chip architecture to build the processors that act as the main computing brains for PCs and servers.
For Intel, the company’s Chief Financial Officer David Zinsner told Rasgon that the PC market has been “deteriorated further” by the “10% decline [versus 2021]Annual PC market guidance given by the company in July. The executive did not offer a revised perspective. Zinsner said the data center market has weakened due to softer sales in China and a more challenging macroeconomic environment.
The analyst also met with AMD’s Dan McNamara, head of the chip maker’s business-server unit. The AMD executive revealed that the current PC environment is a “mess” and the outlook from customers is weaker than expected. AMD said the PC market is trending worse than the company’s previous PC market outlook which was down in the “midteens” year-over-year.
Rasgon has an Underperform rating on Intel stock with a $30 price target. He rates AMD stock at Outperform with a price target of $135.
In Monday trading, Intel stock fell 0.8% to $29.00, while AMD stock fell 0.3% to $76.28.
In April, Intel predicted a recovery for the PC market for the second half of this year. But business conditions have only worsened in recent months. Global shipments of personal computers fell 15% in the June quarter compared with a year earlier, according to IDC. Intel and AMD then lowered their full-year 2022 PC market forecasts when they reported their second-quarter earnings.
But now both companies say the overall PC market is doing even worse than their low expectations. This does not bode well for their results going forward.
Write to Tae Kim at email@example.com