Shares of Intel remain down more than 10% in premarket trading after the company’s third-quarter earnings revealed new weakness in its data center business and reaffirmed the delay of its latest-generation chips.
Intel’s Data Center Group, which derives revenue from enterprises and government customers, saw a 7% revenue drop in the quarter. Overall, Intel’s revenue in the quarter, which ended Sept. 26, declined 4% on an annualized basis.
Bank of America on Friday downgraded Intel’s stock to underperform from neutral, pointing toward the uncertainty around the company’s new chips and a lack of a plan to fix or update its manufacturing challenges.
Intel said in July that it delayed its 7-nanometer processors and that they won’t be available in computers until 2022 and servers until 2023. The company could begin relying on other companies to manufacture its chips, but likely won’t be able to provide more information until January, CEO Bob Swan said.
“The result could be years of uncertainty, with customers at a minimum moving more share to AMD for risk mitigation, and increasingly for a more compelling price/performance/feature list,” Bank of America analysts said in Friday’s note.
Shares of competing chipmaker AMD, which is already selling 7-nanometer chips for PCs and graphics cards, are up more than 1% in the premarket. As of Thursday’s close, the company’s stock was up more than 73% year to date.
Excluding the after-hours move, Intel shares are down about 10% since the beginning of 2020.
CNBC’s Jordan Novet contributed to this report.
