Intel shares fall on disappointing forecast, turnaround hopes dimmed

Intel's (NASDAQ:INTC) shares tumbled nearly 6% in premarket trading on Friday after the chipmaker issued a weak revenue and profit forecast, disappointing investors who were looking for signs of a swift turnaround under new CEO Lip-Bu Tan.

The forecast casts a shadow over hopes that Tan, appointed last month, could quickly steer the company back to its former dominance.

Intel has faced significant challenges in recent years, including struggles to compete in the burgeoning artificial intelligence market and navigating the impact of the U.S.-China trade war on its crucial Chinese market.

Despite signals from Tan about implementing cultural changes and a renewed focus on core engineering, the financial outlook failed to reassure the market.

"The clearest sense from the CEO transition is that this is going to take time," noted analysts at Morgan Stanley.

The Santa Clara, California-based company projected revenue of $11.2 billion to $12.4 billion for the June quarter.

This falls short of the average analyst estimate of $12.82 billion, according to data compiled by LSEG.

Adding to the uncertainty is the potential impact of the U.S.-China trade tensions.

While chips are currently exempt from U.S. President Donald Trump's tariffs, China's retaliatory tariffs could impose levies of 85% or higher on U.S.-manufactured chips, according to a notice from the state-backed China Semiconductor Industry Association (CSIA) in April.

This poses a significant risk to Intel, given its manufacturing operations in the U.S.

Year-to-date, Intel's stock has gained 7.2%, outperforming AI chip leaders like Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD), both of which have seen their shares fall by nearly 20% over the same period.