So much for the vaunted comeback in the second half. Both major computer chip companies are now admitting that demand for personal computers is lagging behind their existing expectations.
On Monday, Bernstein analyst Stacy Rasgon published a report after a meeting with senior executives at
Advanced Micro Devices
) last week. The main takeaway is that the PC market is “getting worse.”
AMD and Intel use the x86 chip architecture to make the processors that serve as the main computing powerhouses for PCs and servers.
As for Intel, the company’s Chief Financial Officer, David Zinsner, told Rasgon that the PC market is “worse” than the “down 10%.” [versus 2021]” annual PC-market guide given by the company in July. The executive did not offer a revised view. Zinsner said the data center market has weakened due to softer sales in China and the tougher macro environment.
The analyst also met with AMD’s Dan McNamara, head of the chipmaker’s business server unit. An AMD executive described the current PC environment as “messy,” and customer sentiment is weaker than expected. AMD said that the PC market trend is worse than the company’s previous view of the PC market by “eleven” percent compared to the previous year.
Rasgon has an Underperform rating on Intel stock with a $30 price target. He rates AMD stock at Outperform with a $135 price target.
In Monday trading, Intel stock fell 0.8% to $29.00, while AMD traded down 0.3% to $76.28.
In April, Intel predicted a rebound for the PC market for the second half of this year. But business conditions only worsened in the coming months. Worldwide shipments for personal computers fell 15% in the June quarter from 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 getting even worse than their lowered expectations. That is not the same as their future results.
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